Interest rates on five-year fixed rate mortgages have fallen below an average of 4% for the first time since the economic crisis began, according to the latest research.
The findings from Mortgage Advice Bureau (MAB) revealed that the average interest rate on five-year fixed rate mortgages hit 3.96% in May, a figure that is 0.9% lower in a year-on-year comparison.
The difference across the year means that those buyers who took out an average five-year fixed rate mortgage on £155,338 last month, would have made savings of more than £4,700 compared to May 2012.
These savings are even more marked when you compare the current rates for five-year mortgages against the average in June 2007 of 6.36% – a staggering difference of more than £13,000.
“As recently as two years ago the idea that five-year fixes would average less than 4% was absurd,” said Brian Murphy, of the MAB.
“Now we’re looking at a situation where five-year rates have fallen every month this year, and product numbers keep climbing as lenders compete for business across the loan-to-value (LTV) range. Low rates are a real pick-me-up in the face of rising house prices.”