“The silver lining for mortgage borrowers in this clouded sky that is the credit crisis will be the minimal chance of base rate rising to 6 per cent - it is now more a matter of when Bank Base rate will start to fall.” said Katie Tucker of John Charcol.
“Lenders have seen the danger in funding their lending using LIBOR but pricing it using Bank rate. Sub-Bank rate trackers are being withdrawn across the board; ones without a high fee to subsidise them will soon be a thing of the past.
“There are only few remaining so borrowers should act quickly if they want to gain a real advantage from any potential fall in Bank rate.
“For those who prioritise a low rate, John Charcol has a three-year tracker at 0.66 per cent under base with a 1.5 per cent fee. Unusually, it is available to 95 per cent without Higher Lending Charge and for remortgages, comes with free valuation and legal fees.
“For purchases, Nationwide has a good value 0.27 per cent discount under Bank rate for two years, with a fee of only £599. It’s flexible with the facility to overpay, underpay, take payment holidays and crucially, the option to droplock to a fixed rate, so covering all possible eventualities.
“Woolwich has launched fixed rates at 5.59 per cent for two or five years, with free valuation and legals on remortgages, and an arrangement fee of £995,” said Tucker, a product she feels will be popular, especially amongst remortgagors.
She continued: “Elsewhere fixed rates are becoming cheaper, but they are still not low enough to compare to the trackers and discounts, especially if you factor in an expected downward movement of Bank rate in the next two years.
“In a few months we should see fixed rates cut by many more lenders so if borrowers are looking for the security of a fixed rate and miss out on the Woolwich range, they should try and hold on a bit longer if they can. Alternatively, they could look at a one year fix with the option to ‘droplock’ to a new rate option afterwards.
“To fix for longer term, National Counties’ new five year fix is very competitive at 5.64% with a fee of only £695 with free valuation and legals for remortgages, or 5.49% for purchases, also with a fee of £695.”
