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Average fixed rate falls to under 5%

Tuesday 24th November 2009

The average two year fixed has fallen to 4.99 per cent, which is the first time it has been below five per cent since 23 June 2009, according to Moneyfacts.

Moneyfacts said a string of rate rises in July saw the average fixed rate rise swiftly to peak at 5.21 per cent by the end of the same month. However, it’s taken four months to retreat back below 4.99 per cent.

Meanwhile, rates are still rising on longer-term fixed rate mortgages, with the average three year fixed rate mortgage increasing to 5.58 per cent.

While the margin on the average five-year fixed rate mortgage has increased to the widest on record. Michelle Slade, spokesperson for Moneyfacts.co.uk, said: “Borrowers are finally starting to see more positive news coming out of the mortgage market.

“Falling rates on popular two year fixed rate mortgages, occurring against a backdrop of lenders raising the maximum LTV on their most competitive deals suggests that competition is increasing.”

Slade said lenders are also finally loosening lending criteria and swap rates have also been falling over the last few weeks, but medium term deals have further to go.

“While it may still be too early to say the worst is over, the signs are all there,” said Slade.

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