5 Year Fixed Mortgage Rates Hit Lowest Rate Since Summer 2007

Date Published 01 February 2013

Borrowers set new record for fixed rate applications. The average five-year fixed rate for mortgage borrowers in December 2012 was better than at any point since before the recession, according to the latest National Mortgage Index from the UK’s leading independent mortgage broker, Mortgage Advice Bureau (MAB).

At 4.27%, the typical five-year rate was 0.34% lower than at the start of 2012 and the lowest since MAB started gathering this data in June 2007. It means any consumer who took out a five-year fixed mortgage at this rate will be over £14,000 better off by the end of their fixed term than if they had done so in July 2008, when average five-year rates hit 6.92%.

Using data from more than 500 brokers and 800 estate agents, the National Mortgage Index also reports that activity for December 2012 was up 7.5% on December 2011, showing that the mortgage market is continuing to recover despite the usual seasonal lull.

Two and three year rates continued to fall in December to 4.28% (vs. 4.40% – November 2012) and 4.52% (vs. 4.73% – November 2012) respectively. Fixed rate deals accounted for over 9 in 10 purchase and remortgage applications in the month: the highest share ever recorded by MAB.

The popularity of fixed purchase applications grew for the seventh successive month to a record high of 91.9%. Fixed deals were also chosen for 91.0% of remortgage applications, up from November’s 89.6% to the highest figure seen in this index.

`Borrowers would usually expect to pay a premium for the certainty and security that fixed rates offer. But the current climate of incentivised lending means in many cases they are enjoying the best of both worlds. Many 60% LTV deals are readily accessible for up to five years at fixed rates below 3%, and even with 85% LTV it is possible to secure a deal below 4%.

Buyers may be paying larger deposits, but before lamenting their prospects in the current market, it is well worth considering the amount of money they stand to save through these attractive rates.

The level of competition means these favourable conditions are likely to last well into 2013. Whether you are looking to buy a home or remortgage your existing property, the prospects of finding an attractive deal are far greater than they were 12 months ago.`

If you would like independent advice on a new mortgage, re mortgage or buy to let investing please get in touch and we can arrange a meeting with you and our advisor Karen Marshall.

Your home may be repossessed if you do not keep up repayments on your mortgage.