Now that 2007 is well under way you should be looking at your mortgage. Experts say homeowners worried about paying off their credit card-bills have a superb range of money-saving mortgage offers to choose from. Banks and building societies are fighting to get your finance business. The mortgage companies often offer some great rates to try to stand out from the crowd. This year is no exception and experts have identified six key trends for 2007.
Fixed rates are the flavour of the moment and will continue to be throughout 2007, this is driven by recent interest rate rises and the threat of more to come. The difference between the rates on fixed deals compared to discount deals is widening so borrowers should think carefully about taking a fixed rate. Two year and three year fixed buy to let mortgage deals are likely to be the most sought after and this is where lenders offer keenly priced deals.
Today it is possible to find two year fixed for less than 5.25% and three year fixed for less than 5.5%. Borrowers should avoid any fixes at more than six per cent unless pundits start to predict that interest rates will rise well over 6%.
After years of expensive rates, offset mortgages or current account mortgages are likely to get a lot more competitive in 2007. If borrowers no longer have to pay a premium rate for an offset, we are expecting more people to take advantage. Offsets allow you to use your savings or current account balances to reduce your mortgage payments or help clear your mortgage early. This is a good way to offset monthly rental income.
Low rate, high fee buy to let mortgages are becoming more widespread. Experts are predicting a raft of rock-bottom interest rate offers but only for borrowers prepared to pay big fees of up to £1,500 on residential mortgages or 2 per cent of the mortgage value on buy-to-lets.
Birmingham Midshires Solutions is making a name for itself in this market. It says customers realise they save overall by paying more up front.
Lenders are tiring of borrowers who switch banks every few years in search of better deals. We are expecting to see far more keenly priced three year fixed rates as lenders try to sign up customers for longer.
Traditional discounts are expected to lose out to trackers this year. With a discount, you pay a fixed amount below your lender's standard variable rate and many discounts can look good. Unfortunately, the variable rates can be kept artificially high, even when the Bank of England reduces its rates. Tracker mortgages are fairer because the rate you pay is based on the Bank of England rate. Abbey, Britannia and Cahoot all have good tracker deals.
