UK mortgage rates fall to lowest level for 23 years
Mortgage rates are at their lowest level for more than 20 years, according to two new reports published by Moneysupermarket.com and Moneyfacts.
Both tracker and fixed rates have fallen as it seems increasingly unlikely that the Bank of England will increase base rate from its record low level of 0.5 per cent until well into 2012.
The report from Moneyfacts reveals that the average two-year fixed rate mortgage deal fell to just 4.32 per cent, three-year fixes averaged out at 4.92 per cent, five-year deals cost 5.29 per cent and the average two-year tracker was available at a rate of 3.37 per cent.
With discounted deals available that beat even these rates, Moneyfacts confirmed that average fixed and tracker mortgage rates are at their lowest level since 1988, when records began.
Michelle Slade, from Moneyfacts.co.uk, said: “An imminent rise in bank base rate now appears unlikely and the cost of funding on the swap rate market has reduced.”
Meanwhile, research by Moneysupermarket.com also shows that lenders are increasing competition as the average two-year fixed rate deal is now at its lowest level since the Bank of England reduced base rate to 0.5 per cent in March 2009.
The average rate for a two-year fixed rate mortgage product is 4.25 per cent compared with 5.59 per cent in March 2009. Moneysupermarket.com also detail how three-year fixes are at their lowest level for six months, at an average of 4.80 per cent and five-year fixed rate deals are at an average of 5.27 per cent, their lowest level since January this year.
Additionally, the best deals on tracker mortgages have also dropped. With the average two-year tracker rate at 3.58 per cent these deals represent better value than the average two-year fixed rate mortgage deals.
Clare Francis, from Moneysupermarket.com, said: “It’s great to see fixed rate mortgage rates coming down and we are now seeing average rates falling to their lowest levels in several years.
"Interest rates will start rising at some point though, so anyone considering a variable rate deal needs to make sure they'll be able to afford higher monthly repayments."
Use the Myfinances.co.uk comparison tables to find the best deal on a new mortgage
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