While the number of mortgage deals available is down by 88 per cent since 2007, the number of five year fixed rate mortgage deals on the market has increased dramatically.
According to research from Moneysupermarket.com, while the total number of mortgage deals available is just 12 per cent of what it was in 2007, five year fixed rate deals have increased more than tenfold, from 39 three years ago to 411 today.
In the same period, two year fixed rate deals have fallen from 3,767 to 612 while three year fixed rates have are down from 2,398 to just 449.
Hannah Mercedes Skenfield, mortgages channel manager at moneysupermarket.com, is not surprised that the total number of deals available on the market has dropped, and says it is a "sobering reminder of just how badly the mortgage market was hit" but says it is interesting that five year fixed rates have seen such a massive increase.
"It is interesting that, whilst all other mortgage types have fallen off a cliff, the number of five year fixed rate deals has actually increased," she said.
"No doubt providers are keen to lock in customers for the long term in order to gain some stability for their mortgage books, but a tenfold increase in longer term fixed rate deals suggests that take-up of these products is probably quite low. Everyone knows that the only way rates can go is up, but five years is a big bet to place."
Despite the fact that the base rate is just 0.5% now, (it was 5.25% in April 2007), five year fixed rate deals are on a average much higher – in April 2007 the average five year fix was 5.74%, today, it is 5.82% which means the margins have soared from 0.49% above the base rate to 5.32 per cent above.
Ms Mercedes Skenfield says that despite the fact rates are high compared to the base rate, there are still many benefits of fixing long term.
"Fixing for just two years means you will not benefit from the currently low base rate and in fact when you come to fix again at the end of the term, fixed rates will inevitably be higher as base rate will have risen - and you will see an inevitable increase in your monthly payments," she said.
Ms Mercedes Skenfield continued, "If borrowers are comfortable fixing for five years then there are still a few worthwhile products available such as the Britannia and First Direct mortgages.
"Base rate is likely to increase back to normal levels in five years; therefore the chances of benefiting in the longer term are high," she concluded, "If you are comfortable locking into a deal for five years then now is a good time as any."
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