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Fixed rate mortgage costs drop to new low

Fixed rate mortgage costs drop to new low

Category: Mortgages

Updated: 11/06/2010
First Published: 11/06/2010

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
Mortgage borrowers have been given a massive boost after the cost of fixed rate mortgage deals dropped to a record low.

Official figures from the Bank of England showed that the average interest rate on a two year fixed rate mortgage for borrowers with a 25% deposit dropped to 3.8% last month.

Rates have been in decline since reaching 4.47% in September last year, and have now dropped to their lowest level since records began 15 years ago.

The average rate charged on a five year fixed rate mortgage deal also fell, dropping to 5.39%, the lowest the rate has been for a year.

There was also another drop in the rates charged on tracker mortgage deals, on which the average rate is now 3.7%.

With the news coming before the Bank of England announced its decision to keep base rate at its record low of 0.5% for the fifteenth month in a row, hopes are high that further reductions could be on the way.

Amongst the best two year fixed rate mortgages currently on offer are a deal from The Co-operative Bank at a rate of 2.95% for borrowers with a 25% deposit, and a deal from HSBC at 2.99%, requiring a 30% deposit.

For borrowers looking for a variable rate mortgage deal for term, a rate of 2.29% is available from first direct which requires a 35% deposit, while ING Direct offers a deal at 2.84% needing a 25% deposit.

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