Confidence returns as mortgage rates fall

The attitude of borrowers is changing as mortgage rates have started to nudge down, according to Yorkshire Building Society (YBS).

For large parts of 2008, borrowers coming to the end of two and three-year mortgage deals have been increasingly staying on their lender’s standard variable rate (SVR) because the new fixed and tracker rate options were proving too expensive.

Rates are now well below 6% as the cost of interest rate swaps used to price fixed-rate mortgages has declined. As a result Yorkshire Building Society recently reduced rates on its fixed-rate mortgage range by up to 0.55% and has since seen application levels double.

Tom Girling, mortgage product manager for YBS, said: “Now that there is clear water between typical SVRs of over 7% and the best two-year fixes, it has focussed borrowers’ attention on getting their monthly costs down.”