TWO top mortgage lenders have kick-started the New Year by cutting rates as experts say there could be more price falls to follow.
Halifax has chopped rates for remortgages by up to 0.35% while deals for new borrowers have fallen by up to 0.15%.
The lender offers home movers a two-year fixed rate starting from 4.49% for someone with a deposit of 40% or rates are as low as 4.23% if you want to fix for five years.
At the same time, Leeds Building Society trimmed rates by 0.21% this week.
Rates now start from 4.53% or 4.25% on five-year fixes.
And there could be further reductions to come, according to experts, especially if the Bank of England base rate continues to come down.
Rachel Springall, from comparison site Moneyfactscompare.co.uk, said: “Mortgage holders will be hoping that the Bank of England base rate will fall further in 2025, and if swap rates calm, this can lead to lower fixed mortgage rates.
“Cuts to the base rate may also delight borrowers who are stuck on a variable rate deal or are soon to come off their low-rate fixed deal, indeed there are estimated to be millions of borrowers due to refinancing in 2025.”
There could be some other key changes with five-year fixes becoming cheaper than two-year deals, according to Nicholas Mendes, mortgage technical manager at broker John Charcol.
He said: “Currently two-year fixed rates are about 0.15% higher than five-year fixes but I expect this to be reversed in 2025, with two-year fixes becoming the cheaper product.
“However, the type of mortgage rate I expect to fall most in 2025 is the tracker mortgage as, by definition, these rates will fall exactly in line with cuts by the Bank of England. “
Should you fix now?
Anyone on a standard variable rate (SVR) could be paying much more each month than on a fixed rate.
[bc_video account_id=”5067014667001″ application_id=”” aspect_ratio=”16:9″ autoplay=”” caption=”Best schemes for first-time buyers” embed=”in-page” experience_id=”” height=”100%” language_detection=”” max_height=”360px” max_width=”640px” min_width=”0px” mute=”” padding_top=”56%” picture_in_picture=”” player_id=”default” playlist_id=”” playsinline=”” sizing=”responsive” video_id=”6352041684112″ video_ids=”” width=”640px”]Someone on an SVR pays £300 more per month compared to a typical two-year fixed rate, according to Rachel Springall.
A fixed rate deal also offers peace of mind over monthly payment as you know what they will be for the term ahead – you can fix for different lengths of times with some deals going up to 10 years.
Your repayments won’t change for the duration of the deal so you can budget with confidence.
Most fixed-rate mortgages come with large early repayment fees, so if you think you could want to exit the deal before the term ends – for example, if you move home – a variable rate without exit fees may be a better bet.
A good independent mortgage broker can help you weigh up the pros and cons of different mortgage options.
These professionals should be able to calculate the overall cost of a mortgage helping you to work out when a high fee but lower rate may work or a lower fee and slightly higher rate is better.