Expert reveals why homeowners should be looking for a new mortgage deal now

blue terrace house

Sub 1 per cent mortgages are on the rise, quadrupling in the last four months, making now one of the best times to secure a new mortgage deal according to experts.

Mortgages with sub- 1 per cent interest rates are becoming more available again. Recent research shows that while back in June there were only 10 such mortgages available in the UK, right now there are 50 such mortgages available.

While most property advice will tell you that low-rate mortgages are more readily available to those with higher deposits, the research, by MoneySuperMarket, shows that first-time buyers can also benefit from this surge in low-interest mortgages.

blue terrace house

Image credit: David Parmiter

‘Now is a historically good time to be on the lookout for a new mortgage deal,’ says Jo Thornhill, money expert at MoneySuperMarket. ‘Just six months ago, securing a mortgage rate of 1.5 per cent to 2 per cent would have been viewed as a real success, but the past four months have seen borrowing get even cheaper, with the availability of deals with rates lower than 1 per cent quadrupling.’

Sub – 1 per cent mortgages on the rise

Many feared that the pandemic spelt the end of cheap mortgages as lenders tightened criteria and many temporarily suspending high-LTV mortgages. This made getting a mortgage as a first-time home buyer particularly tricky.

However, it now looks as if the pandemic has not killed off the low-rate mortgage market. On the contrary, a war to offer the best sub 1 per cent mortgages has started.

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Image credit: David Merewether

Banks have battled since May to offer ultra-low deals, sparked by TSB launching a sub 1 per cent mortgage. It was the first of its kind since 2017, but other banks and building societies have followed suit and been breaking records with the new mortgage offerings.

In August HSBC offered a deal with its lowest mortgage rate ever at 0.89 per cent, a two-year deal that required a 40 per cent deposit. While Halifax launched a five-year fixed mortgage available at 0.98%, the lowest five-year deal since 2007.

‘Mortgages haven’t been this cheap for many years and the great news is that it’s not just re-mortgagers with low loan to value (LTV) ratios that can benefit: there are some great deals available for first-time buyers and home movers too,’ explains Jo.

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Image credit: Colin Poole

With all that said, the size of the deposit will still play a big part in the number of low-rate mortgages you’ll be able to access. Like many other experts Jo still urges caution with some of these deals. 

‘Make sure you shop around carefully and search for a product that meets your needs,’ she says. ‘Think carefully about whether you can afford the repayments and try to build as big a deposit as possible as a large deposit can open the door to lower interest rate deals.’

While there are some amazing deals at the moment, sometimes a low mortgage deal isn’t always the best option in the long term.

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