Mortgage rates are at their cheapest since 1988Make Text Bigger
Mortgage rates have tumbled to their cheapest since records started almost 25 years ago.
Less expensive interbank borrowing on the money markets and confidence that Bank of England base rates are unlikely to rise until next year have combined to push mortgage rates down.
Several lenders have cut rates over recent weeks, with building societies like the Skipton challenging for larger market shares with below-average rate offers.
The lender has announced intentions to quadruple mortgage lending this year compared to 2010 and is offering a 3.99% two-year fix to buy to let landlords.
According to Moneyfacts, the average two-year fix is 4.32%, with slightly less favourable deals over three years (4.92%) and five years (5.29%).
A two-year tracker averages 3.37%.
“Lenders appear to be applying cuts equally across all loan-to-value tiers, which is good news for first time buyers, as previously cuts were only being applied to the lower loan-to-value bands,” said Moneyfacts spokesperson Michelle Slade.
“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.”
Other research shows mortgage rates have fallen to their lowest since the Bank of England cut base rates to the record-breaking 0.5% in March 2009.
For borrowers about to come out of an incentive period, the warning from Moneyfacts and other industry insiders is that as soon as banks and building societies feel the Bank of England is about to raise rates, mortgage deals will start to edge up as well.
“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,” added Ms Slade.
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