Five-year fixed rate mortgages hit pre-crisis low

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.”

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Posted by: Nicola Severn Categories: Finance Tags: , , Comments Off on Five-year fixed rate mortgages hit pre-crisis low

0 Responses to Five-year fixed rate mortgages hit pre-crisis low

  1. avatar Fern B. Hendricks says:

    You can think of the difference, or spread, between variable mortgage rates and fixed rates as the price of insurance that mortgage costs will not increase in the next five years, more or less.