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Five year fixed rates under 3% for first time ever

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Written by: Christina Hoghton
15/11/2016
The cost of the average five-year fixed rate mortgage has fallen massively over the past year, with many providers launching their lowest-ever rates, according to Moneyfacts.

The financial information provider said that this strong competition has pushed the average five-year fixed mortgage rate below 3.00% for the first time on its records.

Average five-year fixed rates are now 2.98% compared to 3.30% this time last year, and 4.68% five years ago, based on a £200,000 mortgage over a 25-year term on a capital and interest repayment basis.

Charlotte Nelson, finance expert at Moneyfacts.co.uk, said: “The average five-year fixed rate dropping below 3.00% is great news for borrowers. In fact, borrowers opting for the average rate now would be £100 better off per month compared to two years ago.

“Just 20 months ago, the average two-year fixed rate stood at 2.97%. This means that borrowers coming to the end of a two-year fixed deal will find they can now get the extra security of a longer term product for a similar price to their old two-year deal.

“With the gap between the average two-year fixed rate (2.35%) and the average five-year fixed rate standing at just 0.63% today, borrowers can now opt for the security of a longer term fixed rate with little extra cost to their monthly repayments.”

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