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p>According to the National Mortgage Index from Mortgage Advice Bureau, Mortgage lenders have made record price cuts, which resulted in rates for two years trackers, two year fixed and three year fixed loans in November, being the cheapest since 2007.
The Index showed that the average two year tracker rates fell by 28 bps in the three months to November this year, being the biggest price cut on record for these products.
The reduced rates have left consumers with significant monthly savings, where those who opted for a five year fix or two year tracker rate will pay £120 less per year, towards their mortgage.
Commenting on the results, Brian Murphy, Head of Lending at Mortgage Advice Bureau, said: “Fierce competition between lenders has led to an all-out mortgage rate war, with two year fixed, two year tracker and three year fixed rates all at record lows. This is resulting in tangible monthly savings for consumers, particularly compared to this time last year.
“There may be room for further discounts, but as we edge closer to an interest rate rise – currently expected in autumn 2015 – it’s likely that we will soon hit the bottom of the curve. Consumers playing the waiting game could therefore risk losing out on the most competitive deals.
“Fixed rates remain the product of choice among most consumers and are likely to become even more popular as the Bank Rate rise approaches. The typical borrower generally prefers to pay a slightly higher premium for greater long term security.”
Recent stamp duty changes, which are also set to save consumers money in housing costs, will actually have less of an impact when compared to Mortgage Advice Bureau’s analysis of recent rate reductions.
Based on November’s average purchase price of £227,619, buyers would only pay £2,052 now under the new system, making a saving of £224.
However, the rate drop will save the typical borrower £463 in repayments over the initial term of a three year fixed rate. For five year fixed rates, the saving can stack up to £632.
Brian Murphy commented: “The recent changes to stamp duty are undoubtedly a coup for the majority of would-be owners, making significant reductions to the cost of buying a home. However, perhaps without realising, many have already been experiencing bigger savings in the form of falling mortgage rates.
“This emphasises the benefit of securing a competitive rate, as doing so can save hundreds of pounds in the long run. An independent mortgage broker is best positioned to review all of the options in the market, and can help guide consumers towards the most affordable and realistic product for them.”
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According to the National Mortgage Index from Mortgage Advice Bureau, Mortgage lenders have made record price cuts, which resulted in rates for two years trackers, two year fixed and three year.
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