Belfast Telegraph

Mortgage costs fall again

Fixed rate deals now at their lowest level for seven years

By Nicky Burridge

The average cost of a two-year fixed rate mortgage has fallen to its lowest level for nearly seven years.

Interest rates charged on two-year fixed rate deals have been falling steadily since August last year, dropping to an average of 4.52% today, according to

The rate is the lowest since September 2003, and down from 4.93% at the beginning of the year.

The cost of five-year fixed rate deals has also improved during the past year, falling from an average of 6.09% in June 2009 to 5.61% now.

At the same time, there has been an improvement in product availability, with the number of different residential mortgages available rising from 1,601 at the beginning of the year to 2,635.

The biggest increase has been seen in mortgages for people with deposits of only 15% or 20%.

There are now 482 different mortgages for people borrowing 85% of their home's value, up from 254 at the end of December.

The number of deals for people borrowing 80% of their home's value has more than doubled during the same period, rising from 153 to 318.

The ongoing steady fall in the interest rates charged on fixed rate mortgages, combined with the rising number of products available, has prompted some commentators to say that now may be a good time for people to consider remortgaging.

Ray Boulger, senior technical manager at John Charcol, says anyone on a standard variable rate (SVR) of 3.5% or more, who does not have an adverse credit history, and has at least 15% equity in their property, should consider remortgaging. But he added that people on very low SVRs, such as homeowners on Nationwide or Cheltenham & Gloucester's 2.5%, are probably still better off staying put.

Data from Moneyfacts shows that consumers still favour fixed rate mortgages over variable rate ones, with around two-thirds of people who are remortgaging opting for a fixed rate deal.

This is despite the fact that the average cost of a tracker deal is significantly cheaper than a fixed rate one at 3.6%, although it has remained broadly unchanged since the beginning of the year.

Mr Boulger said: “The signs are that we are going to see the base rate staying low for two to three years.

“You will be able to get a fixed rate at this sort of level over the next few years as the fixed rate pricing will need to reflect that the bank rate is going to stay low for some time.”

Belfast Telegraph