The average two-year fixed rate in the UK was 4.36% in June, with three year rates at the lowest on record at 4.95%.
The five year rate, at 5.37% is at its lowest since January 2011 and swap rate trends suggest all fixed rates could go lower still.
Louise Holmes, Moneyfacts: “A fall in fixed mortgage rates is great news for borrowers who have wrestled with high rates for many months. Lenders appear to be launching more competitive deals and expanding their product ranges, with lower rates and more high loan-to-value deals, however, strict lending criteria and thorough credit checks remain in place.”
Lenders are also achieving high margins in comparison with pre-credit crunch norms, with just a 0.10% difference between swap rates and average two-year fixed rates in June 2007, compared with 2.94% this month. This is down from the four-year high of 3.28% which peaked in October 2009.
Ray Boulger said fixed rates are hitting record lows because the view is increasingly that Base Rates won’t change until next year.
“But I still think it makes sense to go for a five-year fixed rate to buy security for a reasonable term. I still think the tipping point will be when a good selection of five year fixes sit below 4%,” he said.
Currently, there are just three five-year deals under 4%, including Chelsea Building Society with the lowest five-year fix at 3.89%, Yorkshire Building Society offering 3.99% and The Mortgage Works also offering 3.99%, with a 2% fee.