Mortgage Rates Hit Record Low

Posted on: 21 October 2011

A report by Countrywide shows that the average interest rate of purchase and remortgages has fallen to 3.71% in September 2011, the lowest rate since September 2008.

The mortgage broker and property services group revealed that mortgage rates have fallen by 2.41% over the last three years. It also showed that both fixed rate and tracker mortgages have become significantly cheaper across the board, with most lenders becoming more competitive on pricing.

Figures from the Bank of England also reflect this, showing that mortgage rates across two, three and five year terms are at their lowest level over the last six years.

Nigel Stockton, financial services director at Countrywide, said: “Despite ongoing pressures on lending institutions and the UK economy as a whole, we continue to see some of the cheapest ever remortgage fixed rate products being offered, with some two-year rates on offer currently as low as 2.54%.

” Countrywide’s recent figures whow that the avearge two-year fixed rate mortgage produce has fallen by 1.59% over the last two years, with rates for two-year tracker mortgages fallen by 0.78%.

However, as Countrywide report the gap between monthly payments for tracker and fixed rate mortgages narrowing, a report from the Council of Mortgage Lenders (CML) has revealed that ex-fixed rate borrowers are paying less than their original mortgage. According to its most recent figures, 1.8 million borrowers who are currently on their lender’s reversionary variable rate are paying around £2,600 a year less than they were under their previous fixed rate deals.

And it seems that many borrowers are adopting the “wait and see” approach. The research reveals that markets currently expect the Bank of England base rate to rise from its current 0.5% to around 0.9% by the end of 2012 and 2% by the end of 2014.

Under this scenario, the CML estimates that 85% of those borrowers who have reverted to variable rates would still be paying less than their original morgage payment by the end of 2012, amd around 58% would still be paying less than their original payment throughout 2014.

Paul Smee, director general of CML, said: “The choice of whether or not to fix, and for how long, involves taking a view about the likely direction of future interest rates, along with a personal consideration of how much rate risk is acceptable to a household. Given the economic uncertainty, it is not surprising that for the time being many of those who have reverted onto variable rates and could remortgage are choosing to wait before they decide what to do next.”

David Sansome, Managing Director at Sansome & George said: “Despite the general doom and gloom about the economy, there are some real shafts of light for those in a position to take advantage of these very attractive mortgage rates through either moving home or remortgaging. Our mortgage advisers will be pleased to help you find the deal that is best for your circumstances.”

 

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