Over the last few days we have seen a number of building societies stepping up to the mark with regards to mortgage lending in the UK and today we saw Halifax offer up to 0.5 percentage points off future mortgage arrangements. On the surface it would seem that mortgage lenders in the UK have finally "got the message" but is this really the case?
In a surprising move Halifax has today offered new mortgage customers a 0.3% reduction on their mortgage rates up until the end of 2011 if they apply for a mortgage between 6 September and 3 October this year. Those who also hold a current account with the Halifax will receive a further 0.2% off their mortgage rates and this cut rate offer is available on all Halifax mortgage deals.
Despite the fact that many people are complaining there is little or no competition in the UK mortgage arena, the last few days have seen a number of well-known UK companies, predominantly building societies, step forward with reduced rates. A number of mortgage providers are now looking to tempt homeowners into fixed-rate mortgages which offer a security many are craving, at least in the short term.
The Coventry Building Society has this week announced significant reductions on a number of fixed rate mortgage arrangements which are certainly catching the eye of property buyers. From the 31 August the Society has cut its two-year fixed rate to 2.99% with a three-year arrangement at 3.59% and a five-year deal currently on offer are 4.35%. These are very interesting and very attractive changes to the array of fixed rate mortgages available with the Coventry Building Society although customers do need to shop around before tying themselves down.
The Leeds building society is offering the cheapest five-year fixed-rate mortgage on the market at 3.94%. While the 3.94% rate is only available to customers buying property and contents insurance from the building society, and only available for mortgages with a 60% loan to value ratio, it is the cheapest on the market at the moment. Those who do not wish to take out their contents insurance with the society will be quoted a figure of 4.18% which is also very competitive.
In a surprising change of direction for the UK economy July saw an unexpected increase in mortgage arrangements and consumer lending although net lending was down on the month. Total net lending in the UK with just £86 million in July against a figure of £518 million in June highlighting the fact that more and more people in the UK are trying to repay debt ahead of what could be a further difficult economic period.
While there's no doubt we have seen a gradual increase in minimum deposits in the UK mortgage arena there is also no doubt that the larger the deposit your able to obtain the more likelihood of a successful application and the greater the chance of a more attractive rate.
While the UK mortgage market is by no means as competitive as it has been in the past there is no doubt that if you shop around you will improve your chances of being successful. However, there are a number of factors which many people seem to ignore when looking to grab the best deals in the UK mortgage market. So how can you improve your chances?
Charles Bean, the deputy governor of the Bank of England, has this weekend suggested that Bank of England will step in to restrict mortgage lending in the UK in the future. There is a suggestion that buyers will need to put down between a 10% and 25% deposit on any future housing purchases and indeed the Bank of England may step in to set mortgage interest rates across the UK.
As a consequence of a Think Tank forecast that UK base rates could rise to 8% over next two years, after the UK finally exits a potential double dip recession, there is the possibility that UK mortgage rates could rise to between 12% and 14%. This would be a crippling rise for the UK property market and could potentially push the UK back into a downward economic spiral. There is no doubt that even the slightest incorrect adjustment to UK base rates at the wrong time could have a detrimental impact upon the UK economy in the short to medium term.
