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Lenders pull sub-one per cent deals and hike rates ahead of BoE decision

  • 02/11/2021
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Lenders pull sub-one per cent deals and hike rates ahead of BoE decision
The number of sub-one per cent deals available have fallen to just over 20 while average rates across the board have been increased ahead of the Bank of England’s expected interest rate increase on Thursday.


According to research from Defaqto, the number of mortgages with interest rates between 0.84 per cent and 0.99 per cent has plunged from 82 fixed rate products on Monday last week to 22 fixed rate products this Monday.

Seperate date from Moneyfacts showed that there are 51 sub-one per cent deals available today, 30 of which are fixed rate products.

The Defaqto study found that the average rate for a two-year fixed rate first-time buyer mortgage at 95 per cent loan to value (LTV) has also gone up from 2.45 per cent to 2.69 per cent over the week period. This will add £24 to monthly repayment for a mortgage of £200,000.

For a two-year fixed rate at 80 per cent LTV the average rate has gone up from 1.24 per cent to 1.64 per cent, while on the five-year fixed rate at 80 per cent LTV the rate has remained stable at 1.69 per cent.

The research added that while most of the increases had been applied to two-year fixed rates, which were at record lows last week, five-year fixed rates had also seen some increases.

It said that the best rate for a 70 per cent LTV five-year fixed rate product is 1.19 per cent, up from 1.04 per cent last week. For a five-year fixed rate at 60 per cent LTV the lowest rate has risen from 0.99 per cent to 1.09 per cent.

There has previously been a proliferation of sub-one per cent deals on the market as a result of keen lender competition.

However, many expect the Bank of England to increase interest rates on Thursday, although there is still uncertainty around the final decision, to curb inflation which is forecast to rise to five per cent.

Katie Brain, Defaqto’s consumer banking expert, said: “We have enjoyed record low interest rates for a long-time and they had to start going back up at some point. For anyone who needs a mortgage, there is never a good time for this. However, interest rates are still very low compared to previous years and there are still some great deals to be had.

“Sometimes any saving on the headline interest rate can be wiped out by expensive fees and you need to know what the cost is over the whole period you are tied in for. It is always worth getting independent advice from a professional who can advise you on the right product for your needs.”

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