In spite of renewed speculation around a base rate rise next year, MoneySuperMarket has found fixed term mortgage rates have crept down to some of their lowest ever levels again.
The comparison site’s analysis found the average rate for a five-year fixed deal currently stands at 3.45 per cent, while last year it was 4.06 per cent and in 2012 it was 4.67 per cent.
Shorter term mortgage deals also follow the same pattern, with the average three-year fixed rate coming in at 3.21 per cent today, compared to a rate of 4.80 per cent in 2012.
Similarly, the average two-year fixed mortgage rate is now 2.90 per cent, whereas it was 4.48 per cent in 2012.
Those looking to secure their mortgage rate for a longer duration will also find that there are now more deals to choose from, with 41 10-year fixed rate products currently on the market, compared to 35 last month.
Dan Plant, head of consumer campaigns at MoneySuperMarket, suggested that mortgage lenders are doing a U-turn, decreasing their rates again after hiking them over the last couple of months.
“Even though the Bank of England base rate hasn’t risen yet, it is still a case of when rather than if, so any homeowners looking for a cheaper deal should take advantage of the current low rates.”
He noted that many lenders allow mortgage holders to reserve rates available now for up to six months for a small fee, so even those who still have some time left on their current deal can benefit.
Mr Plant also warned that fees can wipe out the potential benefit of a lower rate, but the good news is that fees have decreased over the last four years, especially for five-year fixed deals.
London & Country Mortgages’ associate director David Hollingworth told FTAdviser that rate rise expectations have fallen back slightly given the recent issues in China, giving lenders a bit of breathing space.
“The level of competition in the market has also been increasing towards the end of the year,” he added.
Andrew Montlake, director at Coreco, agreed that lenders are cutting rates again as they look to build up a good pipeline of business to start off the new year with a bang.
“With a lot of contradictory information in the market place around the timing of the next interest rate changes, Swap rates have held pretty steady and lenders feel that they are able to reduce rates once more.
“I do feel for borrowers at the moment who are trying to make an educated call on when to fix in to mortgage rates in the face of all this disinformation, but for me, the products that are available at present and over the next few months are likely to be as good as it gets and the risk of doing nothing is potentially more of an issue than fixing in too early.”
peter.walker@ft.com
