New research from a leading financial analyst has found that large fixed rate mortgage deals in the UK have fallen to the lowest levels since 1989. And, it isn’t just high value mortgage customers that are benefiting from record deals, with first time buyer rates also falling to unprecedented levels.
High net worth mortgage rates have been falling gradually since the government launched the Funding for Lending scheme last summer. Now, however, a raft of lower and lower rates means that borrowers can access the cheapest fixed rate mortgage deals since back in the 1980s. We look at how you can secure the cheapest large mortgage deal ever.
Two year fixed rate at 1.89 per cent is the lowest rate on record
According to data provider Moneyfacts, borrowers can now access the lowest two, three and five year fixed rates since 1989 – the year that fixed rate mortgage became available.
The Guardian reports that the current cheapest two year deal is the 1.89 per cent rate from the Chelsea Building Society, available to 60 per cent loan to value. For borrowers with a 10 per cent deposit, the Loughborough building society is offering a three year fixed rate mortgage at 4.09 per cent. Moneyfacts say that the two year deal is the lowest ever while the Loughborough BS deal is the lowest 90 per cent loan-to-value three-year fixed rate mortgage on record.
Sylvia Waycot, editor at Moneyfacts said: “To put the current rates into context, if you had opted for a two-year fixed rate mortgage in June 1989 you would have paid an average of 12.83 per cent (the least competitive rate was a breath stopping 13.2 per cent). A five-year fix averaged out at 12.85 per cent.
“Recent criticism levied at banks was that they were offering the best mortgage deals in the less risky 60 per cent LTV tier. It is good news on that front, as some very attractive higher LTV loans are at last entering the market,” she added.
Lower mortgage rates do seem to be stimulating market activity, according to recent figures from the Council of Mortgage Lenders (CML). The number of first time buyers climbing onto the property ladder reached a five year high in 2012 with the number of new homeowners exceeding 200,000 for the first time since 2007.
“Anyone with a large mortgage should be looking to take advantage of these record rates,” said Islay Robinson, CEO of London mortgage broker Enness Private Clients. “Considering that fixed rates are now at their lowest level ever, there are plenty of opportunities for high value mortgage clients to lock in at unprecedented rates.
“As the Funding for Lending scheme continues to takes hold, I expect to see an improvement in mortgage rates at higher loan to values over the next few weeks and months. This can only be good news for the UK’s large mortgage market,” he added.
CML market and data analyst Caroline Purdey agrees. She said: “A worsening in the outlook for inflation presents a greater headwind, but we still expect the Funding for Lending scheme to lift activity over coming months.”