Record low mortgage rates “show no signs of stopping”

UK mortgage interest rates have fallen to record lows and “show no signs of stopping” in 2016, according to financial information service Moneyfacts.

Fierce competition between mortgage lenders has resulted in some of the lowest rates on record with recent economic events also blamed for a radical dip in wholesale interest rates in the weeks following the EU referendum result.

Put simply, mortgage borrowers have never had it so good, and anyone considering a five-year fixed rate mortgage today would save themselves £240 a year compared with the equivalent deal in January.

“Borrowers looking for a new mortgage deal will be substantially better off than they were six months ago,” said Moneyfacts’ finance expert Charlotte Nelson, who believes that mortgage competition is “here to stay”.

Dramatic drops

Average two-year fixed rates have seen the most dramatic drop, falling from 2.76 per cent in January to 2.52 per cent today.

Similarly, the average five-year fixed rate has slid from 3.29 per cent to 3.10 per cent since January, while ten-year fixed rates have shed 0.20 per cent to sit at 3.43 per cent today.

Long-term deals are more readily available since the start of the year too, with the number of ten-year fixed rate mortgages up from 80 products in January to 127 in June.

First rung

Actually getting a foot on the property ladder is proving increasingly difficult, with the number of first-time buyers dropping by a third in the past decade.

However, Moneyfacts’ research suggest that small deposit borrowers are being forgotten about.

The average two-year fixed rate at 95% loan-to-value (LTV) fell by 0.19% from January 2016 to 4.09% today, making it a more appealing time for first-time buyers.

Experts have debated how much lower the rates can go and for how much longer. The advice from Moneyfacts though is now would be a good time to take advantage of the record lows.

By Joe White