19 Apr 2024

Fixed mortgage rates continue to fall

For the first time since Moneyfacts started recording rates in 1988 the average five-year fixed mortgage rate has fallen below 5%, today standing at 4.99%.

In the last 29 months since bank base rate has been on hold at 0.50%, the average five-year fixed mortgage rate has stood as high as 6.24% (September 2009).

	Average 5-year fixed mortgage rate	Monthly repayment	True cost over 5 years
September 2009	6.24%	£993	£59,580
Today	4.99%	£876	£52,560
Difference	-1.25%	-£117	-£7,020
* Figures based on a £150,000 repayment mortgage Source: Moneyfacts.co.uk 10.8.11

It’s not just five-year fixed mortgage rates that continue to fall. The average two-year fixed mortgage rate has fallen from 5.18% in September 2009 to 4.24% today, while the average three-year fixed rate has fallen from 5.61% to 4.74%.

Michelle Slade, spokesperson for Moneyfacts.co.uk, comments:

“The cost of funding fixed rate mortgages through the swap rate market has fallen to an all time low, and this is being passed on to borrowers through some of the lowest mortgage rates ever seen.

“Borrowers opting for the average five-year fixed mortgage today would be paying £117 per month less than someone who secured the deal in September 2009.

“Lenders are trying to tempt borrowers off variable rate deals and onto fixed rate deals as they are concerned about some borrowers’ ability to repay their mortgages when rates finally start to rise.

“A proportion of borrowers on variable rate deals will have absorbed the savings they have made from lower repayments into other monthly expenditure.

“For some of these borrowers affordability will become a problem when rates start to rise and lenders have to make provisions for the possibility that some borrowers may default on their mortgages.

“With fixed rate deals the repayments remain the same and if the borrower’s circumstances remain unchanged then affordability isn't an issue.

“With a rise in bank base rate looking unlikely in the short term, rates could fall further still.

“Once a bank base rate rise becomes imminent rates will quickly start to rise and if borrowers don’t act fast they will miss out on these all time low rates.”

Moneyfacts Group
Moneyfacts is the UK’s leading independent provider of personal financial information and our data is used and trusted throughout the financial industry.

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