Coronavirus impact delays mortgage rate reductions | moneyfacts.co.uk

Michelle Monck

Michelle Monck

Consumer Finance Expert
Published: 15/04/2020

Borrowers may have expected mortgage rates to automatically fall after the Bank of England cut base rate to 0.10% on the 19 March, but the impact of Coronavirus and the demands this has placed on lenders resulted in delays for rate reductions to reach the market. Tracker mortgage rates also increased in March, before declining in April and product availability has also reduced.
Our research for the period of 11 March to 14 April shows that average mortgage rates for all loan-to-value (LTV) ranges, all interest rate types and all deal terms, have reduced from an overall average of 2.59% to 2.41%. Only 0.01% of this reduction came between the base rate reductions and the end of the month, the remaining 0.18% reduction has all happened during the beginning of April, specifically from the 2 April to 9 April. After which rates appear to have stabilised for now.
The average rate for a two-year tracker mortgage across all LTVs has reduced by 17 basis points from 2.03% to 1.86%. While the average two-year fixed mortgage rate has reduced by 24 basis points from 2.43% to 2.19% and five-year averages dropped from 2.73% to 2.48%.
There are now 2, 438 mortgage products available in the UK, a 46% reduction during the period. Of these, tracker mortgages were hardest hit losing 67% of products, standing at a total of 96. Borrowers wanting longer term tracker mortgages will be disappointed as only two-year trackers are currently available.

Can borrowers still get a good mortgage deal?

Most borrowers should be able to remortgage to either a new or their existing lender. Lenders are adjusting their processes, including the use of automated valuations to make sure they can complete remortgages during the Coronavirus pandemic.
Borrowers can also now expect to get five-year fixed mortgage deals for rates close to what was available for two-year deals only a matter of weeks ago. For example, the average five-year fixed mortgage rate is 2.48%, whereas on 11 March, the average two-year fixed rate was 2.43%.
The best remortgage rate available at 60% LTV is 1.19% from NatWest Intermediary Solutions. This two-year fixed rate mortgage is only available through a mortgage broker. The deal lasts until 30 June 2022 at which point the rate reverts to 3.59%. There is a product fee of £995.
TSB and Nationwide Building Society offer the lowest five-year fixed remortgage rate of 1.44%, both charge a product fee of £995 and £999 respectively. The TSB deal lasts until 31 May 2025, while Nationwide Building Society’s is a five-year term from when your mortgage switches to them. Both products will revert to 3.59% once the five-year deal ends. Nationwide Building Society offers £500 cashback on completion or free legal fees. TSB also offers £150 cashback for those who hold a TSB current account.
Those looking to remortgage up to 80% LTV can find the lowest rate of 1.44% from HSBC. The deal lasts until 30 June 2022 after which the rate reverts to 3.54%. There is a £999 product fee and borrowers will need a joint income of at least £15,000 to apply.

Disclaimer

Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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