Fixed mortgage rates now cheaper
Thanks to the government’s £80billion Funding for Lending scheme home buyers are finding fixed mortage rates much lower than they have been in the last twenty years.
According to a research conducted by the financial information firm Moneyfacts, homeowners can now benefit from the cheapest fixed rate mortgage loans since they became available in 1989.
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Mortgage rates have been driven down by the Bank of England and the Government’s Funding for Lending scheme, which was launched in August 2012, with the aim to put £80billion into banks and building societies and encourage them to lend more and reopen the mortgage market following the credit crunch and also encourage wannabe first-time home buyers.
According to the Council of Mortgage Lenders (CML) new buyers entering the housing market for the first time reached a total 216,000 in 2012, the highest in the past five years.
Comparing the average two-year fixed rate mortgage charged back in 1989 which was a whopping 12.83%, the current rate charges are just 4.11%, with some best loans offering a rate of below 2%, like the 1.89% two-year fixed rate from Chelsea building society that was launched on February 8th that covers a loan equivalent to 60% or less of the property value.
Sylvia Waycot, editor of Moneyfacts, said: ‘Fixed rate mortgage rates are dropping like stones and new ‘best ever’ deals are coming onto the market almost daily.’
But Mrs Waycot also warned: ‘[The cut in fixed rate mortgages] does not mean it will be easier to get a mortgage approved. ‘You will still need to have a clean credit record, income sufficient to not only pay today’s mortgage rate but also potential future increases and, of course the stickler for most, the deposit.’
While Ray Boulger, from the independent mortgage broker John Charcol, said: ‘The mortgage market is open for business. Borrowers who, just a year ago, couldn’t get a new mortgage should try again now.’
So if you’re out shopping for a mortgage compare all the rates available, but remember to factor in those extra fee traps.