Have mortgage rates hit the bottom?

One expert says mortgage rates won't go any lower. Here's why and the cheapest rates right now if you're looking for a new mortgage.

The mortgage market is on the move again, with banking industry body, the BBA, reporting a rise in both mortgage approvals and borrowing. At the same time, mortgage interest rates have been falling.

Part of this is due to the Funding for Lending scheme, which is allowing banks and building societies to borrow from the Bank of England at cheaper rates, providing they then lend to both business and ordinary borrowers.

Recently, Bank of England Governor Mark Carney indicated with 'forward guidance' that the Bank of England Base Rate could stay at 0.5% until 2016. So these cheaper mortgage rates are here to stay, aren't they?

One man says we've hit the floor

Not according to one notable mortgage commentator, who says mortgage rates have bottomed out and the next move will be upwards.

The man making these predictions is Ray Boulger from mortgage broker John Charcol. He says an increase in gilt yields, or interest on Government bonds, will feed through to higher inter-bank lending rates, also known as swap rates. This increased cost of bank borrowing could then be passed on to us in the form of higher interest rates on products including mortgages.

Boulger also points out that banks and building societies have been increasing rates on some market-leading mortgages already. And we've noticed some top mortgages are being withdrawn or repriced.

However, the Funding for Lending scheme still has some way to go, so there is the chance that rates will continue to be cut. Whether these are best buy rates or those on run-of-the-mill mortgages remains to be seen.

But Ray Boulger argues there's little or no benefit to be gained from waiting to see if rates do drop further.

Having said that, Boulger did add that if you're overpaying your mortgage and you think the value of your property has risen, it might be wise to wait a bit longer if you're likely to move into another loan to value (LTV) bracket. For example, if you'll soon only need to borrow 65% of your home's value then you'll save more by waiting to take out a mortgage of that size rather than borrowing 66% now.

Cheapest mortgages right now

If you’re looking to buy or remortgage, we’ve rounded up some of those cheap mortgage rates at different LTVs. We’ve concentrated on fixed rates, as they're what most people are interested in at the moment.

Now let’s have a look at mortgages for people who need to borrow 75%.

For those who want to borrow 80%.

And for those who want to borrow 85%.

And finally for people looking to borrow 90%.

What do you think will happen to mortgage rates? Have your say in the Comments box below.

See the latest mortgage rates and get expert advice

This article aims to give information, not advice. Always do your own research and/or seek out  advice from a regulated broker (such as one of our brokers here at Lovemoney), before acting on anything contained in this article.

Your home or property may be repossessed if you do not keep up repayments on your mortgage.

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