In recent months we have become used to seeing mortgage rates that have fallen to an all-time low. However, if the latest news reports are to be believed, they could fall lower still in the near future. Plenty of lenders are on the verge of challenging each other to provide the best-value mortgages all but guaranteeing a price war in this area of the marketplace. As such, people looking to get a mortgage in the near future could well end up having a choice of several products with a sub-1% mortgage rate attached to them. How close are we to this situation? We could be much closer than we may think. The Post Office offered a mortgage with a rate of 1.05% – the record so far but that was last August. Since then, no other mortgage rate has come close to it, or beaten it to the record. However, expert analysts are now assessing the likelihood that we could see mortgage rates falling below the 1% level before the end of this year. This wouldnt apply to all deals, but the most popular two-year fixed rate deal could well be released by some lenders with just such an interest rate before 2016 is out. How much of a saving could such a rate provide? It would depend on the exact rate offered. However, one example illustrated that the cost of a £150,000 mortgage would drop by around £130 on an annual basis. This is great news for anyone looking to get on the housing ladder, as well as for those searching for a more competitive deal. How low might lenders go? There is no way of telling at present. However, in recent days the deals have been getting slightly lower. For instance, one report revealed First Directs 1.15% deal had been usurped by a slightly lower 1.14% from Yorkshire Building Society. Could we be witnessing a gradual race to be the first lender to go below the magic 1% mark? Even the five-year deals are going lower, although the rates are not as close to the 1% mark as the two-year fixed deals. The five-year options have got down as far as 1.99%, which comes from HSBC. This too represents a fall compared to the 2.2% best deal available as 2015 came to a close. Could interest rates actually fall instead of rising as previously predicted? It is a possibility. The latest news from the Bank of England has indicated that interest rates will not now be raised at all. Instead, there are indications they could drop below 1%, which would almost certainly trigger lower mortgage rates. The Governor of the Bank of England, Mark Carney made the announcement and also pointed to the range of other countries including two in Europe that were cutting rates down closer to the zero mark. If events continue in the current vein, we could soon see this happening to provide lower mortgage rates for those wanting a good deal.
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