Average two-year fixed rate mortgage deal now at 3.82%
Wednesday, 05 October 2011 10:06
The cost of the average two-year fixed rate mortgage has hit an all-time low, according to new figures from MoneySupermarket.
According to the price comparison website, the average was dragged down by Leeds Building Society this week after the organisation launched a two-year product with a rate fixed at 1.99 per cent.
In August the average rate on this sort of product stood at 4.01 per cent, but this has fallen to 3.82 per cent at the start of October.
The website claims that the drop is great news for borrowers, however, MoneySupermarket urged would-be homeowners to look beyond a bank or building society's headline rate.
Clare Francis, mortgage spokesperson for the site, said: "Most people are blinded by rate when it comes to mortgages.
"A two-year fixed rate at 1.99 per cent initially seems to be an amazing deal but the new two-year fix from Leeds is also the perfect example of why you need to look beyond the headline rate."
She noted that set-up fees are well above the market average at £1,999. As a result, borrowers taking out a mortgage for less than £164,350 would be better off opting for a higher-rate mortgage from Yorkshire Building Society.
Recently, the Bank of England released figures showing that during August, mortgage approvals were at the highest level in 20 months.
Approvals even outstripped analysts' forecasts, reaching 52,410. However, they are still around half of what they were before the onset of the credit crunch and the value of property appears to be stagnating.
However, Hometrack recently reported that house prices have fallen for the 15th consecutive month and this trend is set to continue.
Use the Myfinances.co.uk comparison tables to find the best deal on a new mortgage
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