Interest rates at a all time low

Mortgage rates for two and three-year fixed rate deals fell to record lows in February, with borrowers accessing the largest number of products since 2008, according to new research.
The average two-year fixed rate mortgage fell to 2.54pc in February, down from 2.56pc in January.
The average three-year fixed rate mortgage fell to 2.92pc, down from 3.01pc the previous month, according to analysis of data compiled by the Mortgage Advice Bureau, a broker.
The average five-year fixed rate deal also declined, from 3.27pc in January to 3.25pc, edging towards August 2015’s record low of 3.24pc.
Annual change in average mortgage rates – Highcharts CloudValuesAnnual change in average mortgage rates Two-year fixed Three-year fixed Five-year fixed Apr ’15Jul ’15Oct ’15Jan ‘
With the Bank of England unlikely to raise the UK Bank Rate anytime soon following a unanimous decision earlier this month by the Monetary Policy Committee (MPC) to keep it at 0.5pc for an 84th consecutive month, low mortgage rates are expected to continue.
The pricing of new mortgage deals is influenced by the future expectation for Bank Rate. The market prediction for the first rise moving out to as far as 2020 earlier this month, which could trigger another wave of even cheaper mortgage deals.
The data is good news not just for prospective homebuyers but also those looking to re-mortgage according to Brian Murphy, head of lending at the Mortgage Advice Bureau.
“Falling rates are helping to ease the impact of rising house prices on borrowers,” he 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 re-mortgaging 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.”
The research also said that borrowers looking to fix their rates in February this year stood to make significant savings compared to those who did it a year earlier.
For example, a borrower taking out a two-year fixed rate in February 2016 will be paying £53 a month less on average in repayments, equating to an annual saving of £636.
Borrowers with a three or five-year fixed rate are now paying £40 less a month – or £480 less annually, compared to February 2015.
More products on offer than ever before
The research also showed that borrowers are continuing to benefit from a growing selection of products.
The total number of mortgage products rose by 3pc in February to 17,654 – a substantial annual increase of 36pc from 12,940 in February 2015.
The number of products sold via brokers increased by 3pc from 12,180 in January to a post-recession high of 12,499 in February – the most since September 2008.
Mr Murphy said: “The number of mortgage products available to consumers has grown exponentially over the past 12 months.
“Competition between lenders is now hotting up ahead of the spring bounce in market activity. This is good news for prospective borrowers, as they are able to choose from a greater range of products tailored to their individual needs.”
Best deals only for those with larger deposits
Some experts have warned that while there is an abundance of products and rates are getting lower, the best deals are reserved for those with larger deposits and not everyone will be able to re-mortgage to a cheaper deal.
Jonathan Harris, director of mortgage broker Anderson Harris, said: “While the average rates for two and three-year fixed-rate mortgages are at record lows, the very best deals are still only available to those with the biggest deposits.
“Some borrowers will be paying much higher than the average, particularly those who haven’t re-mortgaged for some time and are stuck on their lender’s expensive standard variable rate.
“The problem is that not everyone can re-mortgage onto a cheaper deal – tougher affordability criteria are making it difficult for many, particularly those whose income has changed, require interest-only, are self-employed or regarded as an ‘older’ borrower.”


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