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Mortgage rates tumble

Mortgage rates tumble

Category: Mortgages

Updated: 08/12/2009
First Published: 08/12/2009

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 It is now over 6 months old so the content may be out of date.

Mortgage lenders have continued to cut fixed rates, causing the average two year fixed mortgage rate to fall further.

Last week, Moneyfacts.co.uk revealed that the average rate on a two year fixed rate mortgage product fell below 5.00 per cent (4.99 per cent) for the first time since June.

Since then, rates have fallen even further, with the average currently standing at 4.86 per cent. This represents that most marked weekly decline since the beginning of the year, when the Bank of England cut the base rate of interest by 0.50 per cent to 1.50 per cent.

Amongst the lenders to have cut fixed rates in the last week include:

  • Abbey – selected rates cut by 0.20 per cent
  • Accord Mortgages – rates cut by 0.40 per cent
  • Alliance & Leicester – selected rates reduced by up to 0.25 per cent
  • Cheltenham & Gloucester – selected rates cut by 0.10 per cent
  • first direct – selected rates reduced by 0.05 per cent
  • Leeds BS – selected rate reduced by 0.26 per cent
  • Post Office – rates reduced by up to 1.30 per cent
  • Scottish Widows Bank – rates reduced by up to 0.40 per cent
  • Yorkshire BS – rates reduced by up to 0.30 per cent.

"Lenders finally appear to be putting the 'open for business' sign back in the window and bringing competition back to the mortgage market. Margins on fixed rate mortgage deals have steadily increased in the last year as lenders looked to repair damaged balance sheets," commented Michelle Slade, spokesperson for Moneyfacts.co.uk

"Following their peak in October 2009, mortgage margins on the popular two year fixed deals have steadily fallen, now standing at the lowest level since August 2009. The number of two year fixed deals paying below 4.00% has increased by from 53 to 94 in last two months and now accounts for a quarter of all two year fixed deals on the market.

"Borrowers will be hoping that the early Christmas present they have received from lenders will continue into 2010."

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