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Mortgage borrowers boosted as rates hit year low

Mortgage borrowers boosted as rates hit year low

Category: Mortgages

Updated: 27/04/2010
First Published: 27/04/2010

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
Homeowners will be celebrating, after it was revealed rates on mortgage deals have dropped to their lowest level in a year.

According to the latest research from Moneyfacts.co.uk, mortgage rates have been falling steadily since reaching a peak in August last year.

It means the average 2 year fixed rate mortgage is currently priced at 4.63%, significantly down on the 5.21% seen when rates were at their peak.

Based on a repayment mortgage of £150,000, anyone taking out a two year deal today will enjoy monthly mortgage repayments £50 lower than if they had taken a deal out when rates were at their highest.

Three year fixed rate mortgage deals have also dropped and are now priced at an average rate of 5.34%, compared with 5.61% at their peak, a saving of £24 per month.

Five year fixed rate mortgage deals have fallen too, to 5.85%, down from 6.24%, a saving of £36 per month.

Meanwhile, the number of mortgage deals available on the market has reached 2,076, the highest level seen since December 2008, boosting the options available to borrowers.

Also welcome, particularly for first time buyers, has been the news that a significant proportion of the new mortgages that have recently become available cater for those with smaller deposits.

For instance, the number of 90% loan to value (LTV) mortgage deals open to borrowers has more than doubled over the past year, from 71 to 147, while those available at 95% LTV have increased from three to 19.

"The 'open for business' sign is back in the window as lenders improve the availability of mortgages," said Michelle Slade, spokesperson for Moneyfacts.co.uk.

"Lenders are becoming more active in the mortgage market, which is welcome news for borrowers as increased competition is one of the overriding factors in driving rates downwards.

"A 25% deposit remains the benchmark for the majority of the most competitive deals. However, borrowers with a small deposit are increasingly getting access to a wider proportion of the market."

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