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Mortgage rates at record lows

Mortgage rates at record lows

Category: Mortgages

Updated: 12/02/2015
First Published: 12/02/2015

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The mortgage market is enjoying a period of intense competition at the moment, and that can only be a good thing for borrowers, because mortgage rates are falling as a result! Both fixed and variable rates have fallen to fresh lows this month, meaning now could be a great time to consider your options.

Get your mortgage for less

Research from Moneyfacts has revealed that the average fixed rate mortgage is now priced at 3.14%, down 0.05% from the rate of 3.19% recorded in January, marking the fifth consecutive month of reaching a new record low. The average variable rate has posted the same monthly fall of 0.05%, but it's significantly lower than its fixed rate counterpart – the typical two-year tracker mortgage now has a rate of just 2.11%, down from 2.16% last month, marking the eighth consecutive monthly drop and the seventh month of reaching a new low.

Average fees have fallen too, with the average variable fee down from £739 to £727 in a single month. The average fee for a fixed rate mortgage has also reduced, now standing at just £687, down from £697 in January. This low rate/low fee combination means that the cost of a mortgage is genuinely reducing, with both fixed and variable rate borrowers able to reap the rewards and get their mortgage for less.

Fixed or variable?

The question is, what type of mortgage do you want? For many borrowers, the answer will automatically be fixed, as it'll give repayment certainty for a set number of years. You can be confident that your rate won't change and that your repayments won't increase no matter what happens to mortgage rates in the wider market, and that kind of guarantee can be preferable for those who like to keep a tight rein on their budget.

However, some may be tempted to look to variable rate mortgages, particularly given the fact that the average variable rate is over a percentage point lower than the average fixed rate. Given this initial saving, some may decide that the potential of fluctuating repayments is worth the risk, particularly if they're confident that base rate won't rise too much in the foreseeable future – effectively, base rate would need to rise by more than 1% in the next two years for the typical variable borrower to be worse off, so if they're comfortable with that kind of risk (and are sure they could afford higher repayments should rates rise sooner, or higher, than expected), it could be worth considering.

It all comes down to personal circumstances and your individual financial needs, but with plenty of good deals to be found, either avenue could prove beneficial.

See what's out there

Why not start looking at the options? Do a bit of research and you'll soon see how low rates really are, particularly if you've got a decent deposit – even fixed rates can start from below 2% if you've got a 25% or 35% deposit – and whether you want the security of a fixed rate or are prepared to hedge your bets with a variable alternative, now's definitely the time to see what's out there. It's never been cheaper to get on (or move up) the ladder with both rates and fees falling significantly, so start your search at our best buy tables and see how low you can go!

What next?

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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.