The effect of coronavirus on financial services
What is happening to borrowing rates?
Financial services, like all other business sectors, have had to make changes to respond to the current health pandemic’s effect on the economy. Less people spending money has caused financial services to make adaptations necessary to prevent damage to the financial market. The Bank of England has cut the base rate to a record low of 0.1% to reduce the cost of borrowing for consumers and minimize disruption over the coming months. This is the Banks lowest ever interest rate in its 325year history.
What does this mean for mortgages?
Mortgage rates are falling in line with the cheaper cost of borrowing. Although new mortgage applications are mostly on hold due to COVID-19 restrictions, those with existing mortgages should consider switching to a different offer; as they could access some great deals!
What mortgage deals are available?
Mortgage lenders are starting to bring new deals to the market for both fixed rate and tracker mortgages. Experian have launched a user-friendly remortgage calculator to support customers in the search process for the best deals on the market. They have also stated that using this will not impact on credit scores.
The greatest saving can be made for those who already own large amounts of equity on their homes, or those that have put down large deposits. However, that should not stop you from considering a new mortgage deal.
How long does my mortgage offer last?
Usually, a mortgage offer is valid to you for three months. This is from the date that the offer was made to you, up when you take the funds. However, within the current conditions, lenders are offering an additional three-month extension to their offers.