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Two-year fixes best value as borrowing costs continue falling – Mortgage Brain

  • 21/10/2019
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Two-year fixes best value as borrowing costs continue falling – Mortgage Brain
A drop in costs among two-year fixes within the 60-80 per cent loan to value (LTV) tiers has seen homeowners make savings of up to £400 a year on repayments.


Figures from Mortgage Brain’s quarterly product data indicated that the average cost of residential mortgage products continued to decline in Q3. 

In the last three months, two-year fixed mortgages within these 60-80 per cent LTV tiers were between 3.71 per cent and 4.3 per cent cheaper than they were in the previous quarter, based on the cost of borrowing £1,000.

Furthermore, the cost of a mortgage in these tiers is now 3.23 per cent to 5.6 per cent cheaper than Q3 last year – costing between £3.71 and £3.89 per £1,000 borrowed. These figures are down from between £3.93 and £4.02 respectively last year.

On a mortgage of £150,000, this represents annual savings of £234 to £396. 

The cost of the average two-year fixed 90 per cent LTV deal came down slightly by 0.96 per cent in the past three months from £4.16 to £4.12 per £1,000 borrowed. However year-on-year it is 3.52 per cent more expensive overall, as it cost £3.98 per £1,000 borrowed 12 months ago.

For a £150,000 mortgage, this represents a £72 saving on the previous quarter, but an increase of £252 from last year.  


Five-year fixes slower

Five-year fixed rate reductions have been lower than those for two-year fixed rates, with decreases between 0.46 per cent and 1.63 per cent in the last three months and 1.36 per cent and 3.75 per cent over the last year.  

Two-year tracker mortgages at 60 per cent LTV were 1.27 per cent lower in the last three months with a 4.19 per cent annual drop in costs representing annualised savings of £90 and £306 respectively on a £150,000 mortgage.  

Per £1,000 borrowed, this now stands at £3.89 compared with last year’s £4.06.

However, two-year tracker mortgages with 70-90 per cent LTVs, have increased in price over the last year by between 1.47 per cent and 4.87 per cent, representing annualised increases of between £108 and £360. 

Mark Lofthouse, CEO of Mortgage Brain (pictured), said: “There has been a material reduction in two and five-year fixed rate mortgage costs in the last 12 months with much of this being in the last three months – this is great news for customers.   

“While the broad trend in the cost of residential mortgages remains downward, this depends on the exact product and duration.”



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