Average rates continue to fall, with long-term mortgage interest rates seeing the greatest cuts, according to Moneyfacts. All average rates are well b
Average rates continue to fall, with long-term mortgage interest rates seeing the greatest cuts, according to Moneyfacts.
All average rates are well below their levels this time last year. The average five-year fixed rate mortgage has fallen by 0.04% since January to stand at 2.88%, while the average 10-year rate has fallen by double that amount to 3.12%, not far above its shorter-term counterpart.
|Two-Year Fixed Rate||2.30%||2.31%||2.57%|
|Five-Year Fixed Rate||2.88%||2.92%||3.17%|
|Ten-Year Fixed Rate||3.12%||3.20%||3.49%|
|Source: Moneyfacts.co.uk||Compiled 01/06/2017|
In addition, there are more products on the market now. For example, the number of mortgages available at 75% loan-to-value (LTV) has risen by 81 to 904 since the start of this year.
Charlotte Nelson, finance expert at moneyfacts.co.uk, commented: “The traditional two-year fixed rate market seems to have become saturated due to heavy competition among providers, so although rates are still low, they’re not showing the same level of reductions as they were previously.
“As a result, many providers have shifted their focus to longer-term deals, making borrowers now consider long-term fixed as an option to give themselves extra peace of mind.
“FTBs have had a good start to the year, too, with the number of first-time buyer mortgages at 95% LTV increasing from 242 in January to 287 today. Rates have also fallen in this key area, with the average five-year fixed rate at 95% LTV dropping from 4.63% to 4.58% over the same period.”
However, there’s no guarantee that the recent improvement in the market will continue, particularly given recent statistics from the Bank of England which show that the number of mortgage approvals is at a record low, while the Nationwide House Price index shows that average prices are starting to dip.
This suggests that the housing market is starting to stagnate, said Charlotte, which could “have a serious impact on the mortgage market, causing the growth we have seen at the very least to slow. However this might be compensated by borrowers looking to remortgage, which could be partly to blame for the small reduction in the average two-year fixed rate over the past six months.