You are here: Home - Uncategorized -

Mortgage rates halve in ten years

0
Written by: Max Liu
11/03/2019
Mortgage rates are at historic lows, having almost halved in the past decade, according to Moneyfacts.

The Bank of England cut interest rates to 0.5 per cent in March 2009 in a bid to stabilise the UK economy amid the global financial crisis.

The average two year fixed mortgage rate was 4.79 per cent ten years ago, almost double the rate available today at 2.49. The same is true of the average five-year fixed rate which has fallen from 5.62 percent to 2.69.

Moneyfacts said the figures showed there was healthy competition between providers to attract new borrowers.

The drop in interest rates coincided with greater product availability at most loan-to-value (LTV) tiers. The number of LTV products available at 95% has increased 130 times in the past decade to reach 391 today, which should help first time buyers.

At the lower LTV tiers too the number of mortgages available has almost doubled. Borrowers with 40 per cent deposit or equity have 588 products to choose from today compared to 272 in March 2009.

Providers have adapted

Moneyfacts spokesman Darren Cook said: “A decade ago, providers did not seem to want to lend to borrowers who could only raise a small deposit. However, providers have since adapted to the new post-crisis mortgage environment.

“One figure that has remained fairly static over the decade however is the average standard variable rate, having only increased by 0.12% since 2009, from 4.77% to 4.89%. Meanwhile, both the average two- and five-year fixed mortgage rates have nearly halved during this time.

“During the past ten years, not only have the two- and five-year fixed mortgage rates dropped, but the gap between the two has more than halved, falling from 0.83% in 2009 to stand at a difference of only 0.4% today.

“This could be a significant factor for borrowers when considering whether to fix for the short or longer-term, especially with the current economic uncertainty.”

At the same time, Cook pointed out that the Financial Conduct Authority introduced clear affordability measures that mortgage providers are required to follow, meaning lending criteria is much stricter than it was before the financial crisis.

 

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Autumn Statement: Everything you need to know at a glance

Yesterday Chancellor Jeremy Hunt made his first fiscal statement in the role, outlining a range of tax measure...

End of Help to Buy: 10 alternatives for first-time buyers

The deadline for Help to Buy Equity Loan applications passed on 31 October. If you’re a first-time buyer who...

Moving to an energy prepayment meter: Everything you need to know

As households struggle with the soaring cost of energy, tens of thousands of billpayers are expected to move o...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week