Moneyfacts figures revealed today that the average five-year fixed rate mortgage stands at 4.99%, down from a recent high of 6.24% in September 2009 since base rate fell to 0.5%.
In addition, average two-year fixed rates have fallen from 5.18% in September 2009 to 4.24% today, while the average three-year fixed rate has dropped from 5.61% to 4.74%.
Moneyfacts highlighted that the cost of funding fixed rates through the swap rate market has dropped to an all-time low, leading to some of the lowest mortgage rates ever on offer.
Its analysis shows that borrowers opting for the average five-year fixed mortgage today would pay £117 a month less than someone who secured the deal in September 2009.
Michelle Slade, spokesperson for Moneyfacts, said: “Lenders are trying to tempt borrowers off variable rate deals and onto fixed rate deals as they are concerned about some borrowers’ ability to repay their mortgages when rates finally start to rise.
“A proportion of borrowers on variable rate deals will have absorbed the savings they have made from lower repayments into other monthly expenditure.
“For some of these borrowers, affordability will become a problem when rates start to rise and lenders have to make provisions for the possibility that some borrowers may default on their mortgages.
“With fixed rate deals the repayments remain the same and if the borrower’s circumstances remain unchanged then affordability isn’t an issue.”
Slade added: “With a rise in bank base rate looking unlikely in the short term, rates could fall further still.
“Once a bank base rate rise becomes imminent rates will quickly start to rise and if borrowers don’t act fast they will miss out on these all time low rates.”
