It’s no secret that mortgage rates are at an all time low at the moment, with reports just last week of fixed rates which have tumbled to as low as 1.19%  Yes, that’s correct, 1.19%! Lenders have been slashing rates in recent weeks and it’s now possible to fix a mortgage rate for two years for just 1.19% or for a whopping ten years for just 3%! Even a year ago, no one would have predicted that mortgage rates would, or could, fall so low, but what does it mean? Who is winning and the real question we all want to know is just how low can they go?

In order to gain a better insight into the recent rate cuts as well as the coming months predictions, we were lucky enough to speak with David from Search Mortgage Solutions in London  We had a chat with him regarding the current rates and tried to understand what has caused it to happen and what it means in a wider sense.

Rates Slashed Since Summer 2014

Lenders have been slowly slashing mortgage rates since the end of last summer, however never before have rates so low been seen. The Bank of England is now, however, worried that the recovery of Britain could still be derailed by lifting the base rate from it’s record low of just 0.5%. It is estimated, however, that the base rate will stay at this low until at least the second half of 2015, given further concerns surrounding slow wage growth. Others, in contradiction to this, suggest that it could be as far away as the end of 2016 when rates rise, however if you’re considering buying and locking into a fixed rate mortgage, it makes sense to do so sooner rather than later as any changes could see these low rates vanish rapidly.

Last April, tougher mortgage rules were introduced in the UK and this, as you would expect, produced a slowed rate of lending, meaning many are still playing catch up to deliver mortgages alongside a rise in house prices in general over the past year. This, in short, has delivered a ‘sweet spot’ for mortgage rates which has fuelled the recent rate cuts.

Is It The Right Time To Buy?
Whilst we’ve seen record lows for mortgage rates this month, there’s every chance that rates could fall even lower over the coming weeks, however there’s just as much chance that these could be axed within the same period. It’s important to weigh up the pros and cons of a particular mortgage and house purchase and, whilst house prices are rising, settling for a low-rate fixed mortgage could see the impact of this rise lessened considerably. In other instances, it could well mean that a higher priced house is cheaper to repay each month than a lower priced on just 12 months ago!

Above all, it’s important that you make the right decision and don’t just jump into the first deal you see simply because of attractive numbers! Always take the time to speak with an experienced broker before proceeding with any application and always spend time thinking any decision over for a while first to make sure it’s the right one!