The trend of low rate mortgages which picked up momentum during the summer and autumn of 2015 has continued into the new year with the announcement of a 9-year low at the start of February.
This is the sort of figure most of us will see at a glance when flicking through the days headlines, without actually digging to see if there is more to it, which in these circumstances, there more often than not is.
Of course not many of us have the keen financial eye needed to understand all of the jargon flying around in many mortgage based articles and features, so to put the current situation in terms everyone can understand, here are the facts on just how good these new mortgage rates really are.

Record Lows

New figures released by Moneyfacts.co.uk show this nine-year low that we are currently experiencing. They assess the interest rate on a two-year fixed mortgage in the UK.
The figures show that the interest on these mortgages fell to 2.52pc (per capita) in February from 3.14pc, the figure a year earlier. Interest rates have fallen considerably since Money Facts began compiling these stats back in 2007, when the average for a 2-year fixed mortgage was north of 6pc.
The figures from Money Facts were boosted by comments made by the Bank of England Governor Mark Carney who in mid January stated that interest rates are likely to remain at their current lows for longer than originally expected.
The reason for this lies in inflation. The Bank of England’s target to reach 2pc for inflation will take longer than they planned due to cheaper oil prices and general global instability.
While inflation remains a wider issue for the UK economy, for mortgage interest rates it all looks rather rosy, or does it?

Higher Fees

While low interest rates are great for us when applying for mortgages, lenders just aren’t getting the sort of returns on their deals that they have done previously.
In an attempt to curve their losses on having lower interest rates, many lenders have increased the fees borrowers must pay to arrange a loan with them. Doing this allows them to advertise the headline grabbing low mortgage rates, yet make back some of the money that they concede from doing so.
The average mortgage arrangement fee is now up £32 in the last 12 months from £924 to £956, whilst the fees for high-value loans have reached a high of £7,500. These figures become even more alarming when comparatively there is not that big of a gap in administrative costs between different scale deals.
With a seemingly ever expanding mortgage market of 4,000 plus loans currently available, it is becoming increasingly difficult to find the most cost-effective deals available.
It’s developments like this which blur the lines between a good and bad deal, something which is of course very alarming when it is your own hard earned cash at stake.

Too Good To Be True?

Well in a word, yes. Of course it would never be that easy, however there are still great deals available depending on your circumstances. With extra potential pitfalls such as arrangement fees waiting to ruin your finances, there is no better time to seek the advice of a mortgage broker.
At Search Mortgage Solutions we can sniff out a bad deal a long way off and help find you the best for your current financial situation.