Cheaper Contractor Mortgages Rates
It looks like cheaper contractor mortgages will be with us for some time now.
It was thought that Bank of England interest rates would soon be on the way up, pushing up the price of contractor mortgages.
The Governor of the Bank of England had hinted that they could be going up by early next year.
He had said that late this year, they would be monitoring the situation closely.
Interest rates on contractor mortgages had started to rise in anticipation of a rate rise coming within months.
Mortgage Rate Increase Unlikely
So, the contract Mortgage market got a pleasant surprise when the Bank of England announced that the first increase was unlikely to come before May 2017.
That means that we could have low mortgages rates for 18 months or maybe even more.
Cheaper contractor mortgages could be here for a while.
The Bank of England had expected that inflation would be starting to rise by now.
However, inflation is keeping itself very low at around zero.
This is because problems in the world economy, and especially in the Euro area and China, are keeping the UK economy from roaring ahead.
Lower Economic Growth Keeping Interest Rates Down
Indeed the Bank decreased, slightly, their estimates for growth in the UK economy this year and next year.
The Bank has taken down its predicted growth in the economy from 2.7% to 2.6% this year and from 2.6% to 2.5% next year.
Normally, at this stage in the cycle, the economy would be roaring ahead with 3% to 4% growth and with inflation starting to rear its head.
However, deflationary conditions in the world economy are keeping the UK to non-inflationary growth levels.
Indeed, the Bank said that inflation would only be 1% by the end of next year. This is hardly the runaway inflation that could cause interest rates to rise.
This is very good news for contractors and the specialised contractor mortgages market.
Mortgages for Contractors to Remain Cheap
According to one mortgage broker, it could mean contractors getting even cheaper rates than before with the first interest rate hike perhaps 18 months away.
Currently, contractor mortgage rates are about as low as they have ever been. Yet expect them to go even lower in the coming weeks as lenders adjust to the new scenario of low-interest rates for a longer period of time.
They will start to reverse the increases they had put on interest rates in anticipation of a base rate rise.
Cheaper contractor mortgages are on the way.
Better Mortgage Offers for UK Contractors
The advent of specialized mortgages for contractors, in recent years, mean that contractors can now get better offers than they used to get, at lower interest rates, and they don’t, now, have to produce three years worth of accounts.
They no longer get offers based on their Director’s salary.
That’s provided they use specialist contractor mortgage brokers rather than walk into high street banks or building societies.
Mortgage Offers for Contractors
Nowadays, contractors can get offers of 4 times their daily rate annualised – just on production of their contract. It’s taken that contractors work 48 weeks a year.
So, a contractor earning £500 a day gets £2,500 a week, or £120,000 a year.
With a mortgage offer of 4 times salary that equates to a potential mortgage offer of £480,000.
To take advantage of these lower rates, contact a specialist contractor mortgage broker for more info, by filling in the form below.
Please click on Contractor Mortgage Application and fill in the form there.