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Five-year fixed mortgages are making a comeback

The last few days have seen a number of five-year fixed-rate mortgage offers hit the market with suggestions that many mortgage providers believe interest rates are nearing their bottom. Abbey is offering a five-year fixed mortgage at 3.95% with a £995 fee and a 40% deposit required. We have also seen a similar deal announced by HSBC with a fixed rate of 3.99%, so are times really changing?

While it is good news that the five year fixed mortgage is back in the running it is concerning to see a substantial deposit required at this moment in time. While from the bank's point of view they are looking for as much asset backing as possible, which is provided by a 40% deposit, many UK property investors are not in a position to accommodate such a requirement. We are very much at a "chicken and egg" situation in what comes first, a reduction in rates and terms by mortgage providers or property investors stepping up to the mark and finding their 40% deposits?

Slowly but surely we are seeing signs of interest in the mortgage market but until deposit requirements fall further there is very little chance of a significant increase in mortgage lending in the short to medium term.

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