Todays mortgage rates
Now is a great time to take out a mortgage. Mortgage rates are currently at their lowest level since the 1960s, with rates below 5.0% on some of todays best fixed rates mortgage deals. The reason why todays mortgage rates are so low is down to two factors - the base interest rate and todays competition in the mortgage market.
Base interest rate influences on todays mortgage rates
The base interest rate is the benchmark interest rate from which mortgage lenders fix the rates on their mortgage products. When Labour came power in 1997 they handed control of the interest rates to the Bank of England's Monetary Policy Committee (MPC). The MPC meet every month to analyse the state of the UK economy and more specifically the economic factors influencing the rate of inflation.
Inflation is the rate at which the cost of goods and services increase. High rates of inflation induce instability in the economy, accelerating boom-bust cycles. Low rates of inflation on the other hand are synonymous with a more stable economy. It is the MPC's job to stabilise inflation in line with the government's projected target, which is currently set at 2% growth.
When the base interest rate is in a period of stability, as it has been in recent times, the confidence of mortgage lenders increases. The result is that mortgage lenders offer mortgage rates close to the base rate, and are even willing to fix mortgage rates on fixed rates products for several years.
Mortgage market competition influences on todays mortgage rates
Competition in the mortgage market has steadily increased over the past decade. Not so long ago buyers had a very limited choice when it came to taking out a mortgage, both in terms of mortgage product and mortgage provider. In todays Internet-driven society however the mortgage market could not be more different. There are literally hundreds of mortgage providers now available offering a range of mortgage products, with rates to suit all circumstances.
Competition for customers is indeed very intense. High street lenders have been joined by internet-only mortgage companies in the race to secure signatures from todays mortgage hunters, many of whom are looking for good rates on re-mortgage products. As a result it is often the mortgage company with the best marketing tactics and the lowest rates that win in todays mortgage market.
The future of mortgage rates
If you're in the market for a new mortgage product then now is the time to act. Todays mortgage rates may soon be increasing as the MPC looks to head off potential rising inflation problems with increases in the base rate. Mortgage lenders won't hang around if this happens, increasing their mortgage rates to reflect the change in the base rate.
To take advantage of todays competitive rates why not look for a fixed rates mortgage product. Some mortgage lenders are offering to fix todays sub 5.0% rate for up to 7 years, protecting you against short term future rises above todays mortgage rates.