UK mortgage rates fall to lowest since 2007
According to the Mortgage Advice Bureau (MAB), record cuts over the past three months have led to mortgage rates falling to their lowest in the UK since 2007.
The MAB collated and analysed data from Moneyfacts.co.uk to create the National Mortgage Index, which showed that the average two-year tracker rates had dropped by 28 points from September to November: the largest autumn reduction on record for these products.
Two-year tracker rates dropped to new lows of 2.38 per cent in November, with average two-year fixed rates at 3.44 per cent.
Consumers could save over £140
Brian Murphy, Head of Lending at Mortgage Advice Bureau, attributed this record fall to “fierce competition between lenders” which has resulted in an “all-out mortgage rate war”.
“Two-year fixed, two-year tracker and three-year fixed rates [are] all at record lows. This is resulting in tangible monthly savings for consumers, particularly compared to this time last year,” he said.
Buyers who opted for the average three-year fix in November will save up to £144 in repayments during their fixed period, with those who have a five-year fix or two-year tracker rate paying around £120 less on their mortgage.
Bottom of the curve is coming
Mr Murphy noted that there might be “room for further discounts”, but also warned that the bottom of the curve may soon be reached due to the expected interest rate rise in next autumn. This means that consumers playing the waiting game could risk losing out on the most competitive deals.
“Fixed rates remain the product of choice among most consumers and are likely to become even more popular as the Bank Rate rise approaches,” Mr Murphy said. “The typical borrower generally prefers to pay a slightly higher premium for greater long term security.”