Mortgage rates have reached a historic low with the launch of a new 0.79pc loan, the lowest ever recorded in Britain.
A rate war has erupted in the mortgage market in recent months with banks repeatedly undercutting each other on price. There are now 140 loans on the market with sub-1pc interest rates, financial analysts Moneyfacts said.
Platform, part of the Co-operative Bank, has undercut them all, having launched a two-year fixed-rate loan at 0.79pc.
Aaron Strutt of Trinity Financial, a mortgage broker, said the previous lowest rate was offered by Barclays at 0.86pc and suggested rates could fall even further.
“Banks that are already offering loans below 1pc are indicating they could cut a further 0.25 percentage points from their rate,” he said.
Borrowers must have a 40pc deposit and pay a £1,499 arrangement fee to take out the Platform loan. Even with the large fee, Mark Dyason of Edinburgh Mortgage Advice, another broker, said homeowners could make a substantial saving by moving to a lower rate.
He said customers on Lloyds Bank’s standard variable tariff, which charges 3.59pc, could cut their outgoings considerably. “The rate gap has never been bigger or the call to action louder,” he said. “It’s time to remortgage.”
Although the mortgage rate war has seen rates fall to record lows, the price battle has typically been focused on borrowers with the largest deposits. However, banks’ focus has now expanded to other parts of the market.
Platform has also launched a two-year fixed-rate loan at 1.97pc for customers with a 10pc deposit, targeting first-time buyers. In total there are 4,877 mortgages on the market today, compared to 2,412 last September, Moneyfacts said.
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