It's official – average mortgage rates have fallen even further! It's a seriously good time to be a homebuyer at the moment (and arguably, an even better time to be a remortgagor), because it's never been cheaper to finance that new home.
Our figures show that the average two-year fixed mortgage rate has fallen by 0.11% this month to hit 2.76%, down from 2.87% in June and the lowest rate seen since we began recording this measure in 2007. Interestingly, despite rates falling across all loan-to-value (LTV) bands, those at the higher end of the scale continue to be the driving force behind the overall reduction.
For example, the average rate for a two-year mortgage at 95% LTV has fallen by a significant 0.23% in the last month to stand at 4.47%, while the 85% and 90% LTV rates have dropped by 0.15% and 0.13% respectively. This means that those with smaller deposits can benefit from an even more competitive landscape, and can secure that first home for less!
Those seeking to secure their mortgage repayments for longer can also benefit – the average five-year mortgage rate has fallen by 0.09% this month to another record low of 3.29% (down from 3.38% in June) – as can those looking to take advantage of variable rate deals, with the typical two-year tracker rate now standing at just 2%!
And that's not all. The number of mortgage deals available has also hit a record level, with product numbers rising by 103 this month to reach a whopping 4,059, beating the previous record of 4,046 set in September 2007. Again, the product count increased across the majority of LTVs, so there's far more for borrowers of all kinds to choose from.
We've mentioned the rising incentive to remortgage a lot recently, and that incentive is still growing! Our figures show that those who are coming to the end of a fixed rate deal would face a rate increase of 1.27% if they reverted to their lender's standard variable rate (SVR) – based on the fact that the average two-year fixed rate in July 2013 stood at 3.57%, while the current SVR is 4.84% – a substantial increase from last month's difference of 1.12%.
Unless SVRs reduce dramatically, this gap is only going to increase, which means it's still far cheaper to remortgage than revert – and that pattern looks set to continue. So, why wouldn't you want to remortgage?! There's simply no financial incentive to revert, and when you consider how low rates are at the moment, it's the perfect time to take the plunge.
So, is it time to get in on the action? It's a great time to do it, particularly given that rates won't stay at such record levels forever. When base rate rises mortgage rates will soon follow, and there are even concerns that the ongoing crisis in Greece could have an impact.
However, none of this will have an immediate effect, and as it stands, the run of low rates seems pretty safe. It doesn't hurt to check out your options though, and if you're thinking of moving or buying that first home (with a rocketing number of deals for first-time buyers, you're picking a great time to do it!), make sure to compare mortgages to see just how low your repayments could be.
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Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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