25 Apr 2024

Mortgage rates hit all time low

Average fixed and tracker mortgage rates have fallen to their lowest level since Moneyfacts started recording rates in 1988.

In the last few months lenders have steadily reduced mortgage rates, battling it out to reach the top of the best buys.

Deal	Average Rate
Two Year Fixed	4.32%
Three Year Fixed	4.92%
Five Year Fixed	5.29%
Two Year Tracker	3.37%
Source: Moneyfacts.co.uk 27.6.11

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

“Earlier this year the market expected a rise in bank base rate that saw mortgage rates start to rise.

“An imminent rise in bank base rate now appears unlikely and the cost of funding on the swap rate market has reduced.

“This reduction in funding costs has led to average mortgage rates falling to their lowest level since Moneyfacts started recording rates in 1988.

“Lenders appear to be applying cuts equally across all LTV tiers, which is good news for first-time buyers, as previously cuts were only being applied to the lower LTV bands.

“While rates may still fall slightly further, it is likely that some lenders will instead opt to make existing competitive deals available to borrowers with smaller deposits.

“Unfortunately for borrowers, lenders don’t appear to be passing the full fall in the cost of funding on to lower mortgage rates.

“The spread between the cost of funding and average mortgage rates now stands at its highest level since December 2010.

“Lenders are always slower at bringing rates down than they are at raising them and as soon as the market expects a base rate rise, mortgage rates will start to increase again.

“If borrowers delay too long to secure a new mortgage deal, they could find that they miss out on some of the lowest rates ever seen.”

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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