According to "Moneyfacts" today: " Lenders continue to cut fixed mortgage rates in an attempt to get borrowers to switch away from their variable rate deals.
Their latest research has revealed the average five-year fixed mortgage rate has fallen below 5% for the first time since records began in 1988. While the average five-year fixed mortgage rate has stood as high as 6.24% (in September 2009) in the 29 months since bank base rate has been at 0.50%, rates have decreased to 4.99%. At the same time, the average two-year fixed mortgage rate has fallen from 5.18% in September 2009 to 4.24%, while the average three-year fixed rate has fallen from 5.61% to 4.74%.
With the cost of funding fixed rate mortgages through the swap rate market having fallen to an all time low, Michelle Slade, spokesperson for Moneyfacts, said this is being passed on to borrowers through some of the lowest mortgage rates ever seen. "Lenders are trying to tempt borrowers off variable rate deals and onto fixed rate deals as they are concerned about some borrowers' ability to repay their mortgages when rates finally start to rise," added Ms Slade. "A proportion of borrowers on variable rate deals will have absorbed the savings they have made from lower repayments into other monthly expenditure, meaning affordability will become a problem when rates go up."
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