Home loan rates hit 7-year low

Tuesday, 22 June 2010 01:49

By myfinances.co.uk staff

The average rate for two-year fixed-rate mortgages has fallen to the lowest level since September 2003 at 4.52 per cent, according to new figures from Moneyfacts.

It said the interest charged on fixed deals has been steadily declining since the end of last year, as lenders try to tempt house hunters away from record low standard variable rate (SVR) loans.

The company said the typical rate for a three-year fixed mortgage has dropped to 4.16 per cent, the lowest since May 2009, while a five-year deal comes with an average interest rate of 5.61 per cent, the best available since last June.

Michelle Slade of Moneyfacts said that in addition to attempts to move borrowers away from the SVR market, the cuts are being fuelled by increasing competition among lenders following the recession.

"The platform has been set for the mortgage market to return to some sort of normality, while still applying the lessons learnt over the last few years," she added.

Independent mortgage broker John Charcol recently said that uncertainty about the outlook for interest rates and the wider economy saw 26 per cent of new borrowers opt for fixed-rate deals during May, the highest proportion since October 2009.

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