Fixed mortgage rates fall to record lows
Mortgage rates for two and three year fixed rate loans have fallen to record lows in February, according to research by the Mortgage Advice Bureau.
The average rate for a two-year fixed rate mortgage fell to an all time low, from 2.56pc to 2.54pc, when compared to the previous month. A similar trend was also recorded for three-year fixed rate mortgages, which fell from 3.01pc to 2.92pc in the same time period.
Additionally, five-year fixed rate mortgages fell from an average of 3.27pc to 3.25pc, which is just above the record low of 3.24pc recorded in August 2015.
Mortgage lenders generally set their rates based on the predicted base interest rate, which is set by the Bank of England (BoE).
Until recently, it was expected that the BoE would start gradually increasing the base interest rate, but the Monetary Policy Committee (MPC) recently made the unanimous decision to keep the rate at a record low of 0.5pc, for an 84th consecutive month.
Experts are now suggesting that it would be as late as 2020 until rates start to increase, which could subsequently trigger even more falls in the average fixed term mortgage rate.
The falling cost of a mortgage has been reflected in the increased popularity of the product, as more borrowers accessed two and three year fixed rate deals in February than at any time since 2008.
Good news for borrowers
Industry experts have claimed that the falling rates are good news for both homebuyers and those looking to remortgage.
Brian Murphy, head of lending at the Mortgage Advice Bureau said: "Over the past 12 months fixed rates have fallen steadily, meaning borrowers taking out a mortgage today can benefit from lower monthly repayments.
“This is not only good news for prospective homebuyers: existing homeowners can look to take advantage of these low rates by remortgaging to a much better deal, particularly if they are on a poor value standard variable rate (SVR).”
“Given the current outlook, low mortgage rates look set to stay on the menu for some time. There is an appetite among lenders for business, and consumers are in a good position to reap the benefits of increased competition.”
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