Mortgage rates slashed but borrowers urged to beware of hefty fees

Martin Lewis provides advice on mortgages in later life

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There are now many deals available at less than 0.9 percent that could save people thousands on their mortgage. But the lowest rates don’t always represent the best deal, as they often come with hefty arrangement fees.

As rates are falling, lenders are seeking to get money in other places.

Borrowers are now seeing more low interest deals come with up-front fees of £1,499 or more compared with the £999 that was commonly available last year.

Aaron Strutt, of mortgage broker Trinity Financial, told”Mortgage rates are mind-bogglingly low at the moment.

“If you are looking for a low rate and you have a clear credit history and a decent deposit, there is a lot of choice.”

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Halifax have launched new market-leading deals for borrowers to look at when re-mortgaging at 60 percent loan-to-value (LTV).

The bank’s new two-year fix has the lowest rate on the market at 0.83 percent, while the five-year fix is available at 0.98 percent.

HSBC have also come forward with their low rate at 0.89 percent.
This is the lowest rate given in their whole history.

The two-year fixed rate incurs a £999 arrangement fee and is only available to home movers or those mortgaging with at least a 40 percent deposit or equity.

With five-year fixed rates becoming popular, homeowners are also now able to lock in an interest rate of less than one percent so it’s important to find the best deals.

HSBC recently launched their sub-one percent deal on a five-year fixed rate.

This gives their borrowers a rate at 0.99 percent with a £999 fee.

Brokers say that, in some circumstances, it may even be worth customers exiting a fixed-term mortgage early.

Then they can start paying the early repayment penalty.

By doing this people will be able to lock in a super-low rate.

Mortgage rates have been falling over the past few months.

This was inspired by TSB launching a two-year fix at just 0.99 percent in May.

At the time, the deal was the first of its kind since 2017.

But many other lenders have since followed this pattern.

As the competition continues, rates could fall even further.

But these lowest rates don’t always mean the best deal so people should be vigilant when looking.

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