Mortgage rates are at the lowest level they have been since this time last year, according to market analysis from Moneyfacts.co.uk.
When the base rate started its steady fall from highs of 5.25 per cent two years ago to 0.5 per cent 12 months later, many commentators criticised the lack of correlative cuts in mortgage rates, but lenders have gradually followed suit and rates are now lower than they have been for a year.
Any initial mortgage rate cuts in the wake of a plummeting base rate were soon counteracted by mortgage providers' reluctance to lend, instead, tightening their criteria and offering lower loan to values.
But mortgage rates peaked in August last year, and have been on the wane since, Moneyfacts has found, and, using the barometer of the market – the two year fixed rate mortgage – has determined that it stands at the lowest level in a year, with the average three and five year fixed rates not much higher.
In real terms, this decline in mortgage rates has seen a gradual reduction in monthly mortgage payments of £50 for two year fixed rates, £24 for three year fixes, and £36 a month for a five year fix, based on a £150,000 repayment mortgage.
Moneyfacts.co.uk explains that the fall in mortgage rates is due to competition returning to the mortgage market, with a rise in the number of deals available to 2,076 – its highest since December 2008, and a 71.7 per cent increase since the number fell to its all time low of 1,209 in April 2009.
Michelle Slade, spokesperson for Moneyfacts.co.uk commented: "Lenders have slowly become acclimatised to a new look mortgage market and continue to take more steps to improve the competitiveness of deals. "The ‘open for business' sign is back in the window as lenders improve the availability of mortgages.
"Lenders are becoming more active in the mortgage market, which is welcome news for borrowers as increased competition is one of the overriding factors in driving rates downwards."
© Fair Investment Company Ltd