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Rates on long-term mortgages plummet

Rates on long-term mortgages plummet

Category: Mortgages

Updated: 24/04/2012
First Published: 24/04/2012

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 It is now over 6 months old so the content may be out of date.

Rates on long-term mortgages have fallen over the last 12 months, research conducted by Moneyfacts.co.uk has found.

The average rate of a five year fixed rate mortgage has decreased in the last year, from 5.59% to 4.86%.

Two years ago, the average rate on long-term mortgages was 5.87%.

"Average rates for five year fixed rate deals have been falling steadily for the past couple of years," said Louise Holmes, spokesperson for Moneyfacts.co.uk.

"Fixed rate mortgages offer the reassurance of a set monthly payment and can be beneficial when planning financial budgets, as the repayment amount remains the same over the duration of the term."

Providers have cut their pricing on longer term mortgages for a number of reasons, one of them being to try to attract borrowers off low standard variable rates and tracker deals linked to the low base rate.

Another is the falling cost of funding for providers, although borrowers are being warned that they run the risk of missing out on the low rate deals if they wait too long.

"Interest rates are predicted to stay at the historical low of 0.50% for the foreseeable future," added Ms Holmes.

"Borrowers would be wise to take advantage of the low mortgage rates, however, as lenders will begin increasing product rates once interest rates rise."

You can check out the lowest rate long-term mortgage deals at the Moneyfacts.co.uk Best Buy tables.

Find the best mortgage rate - Compare best selling mortgages

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 Any products featured may be withdrawn by their provider or changed at any time.