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Mortgage rates continue to fall

Lenders shrugged off rumours of a base rate hike and continued to cut mortgage rates at the end of last year.

Fixed rate mortgages have fallen across all terms and LTVs, according to new research from Moneyfacts.co.uk.

Charlotte Nelson, finance expert at the site, said rates are likely to stay low as the first base rate hike is pushed even further back.


“Rumours flourished throughout the latter part of 2015 regarding an imminent rate rise, but now that Bank of England governor Mark Carney has said that it isn’t quite the right time to raise base rate many borrowers can breathe a sigh of relief.”

Nelson said the Bank of England will raise rates at some point, so borrowers need to take advantage of current low mortgage rates before they disappear.

She said: “For the last few years, borrowers have been enjoying the benefits of downward-spiralling mortgage rates, which have been fuelled by heady competition in the mortgage market.

"The average two-year fixed rate deal at 75% LTV has fallen by 0.69% in just one year, while the average five-year fix has dropped from 3.25% to 2.94%.”

Nelson said that with the average SVR charging 4.82%, more and more mortgage holders are remortgaging to a better deal.

“By switching to the average two-year fixed rate at 60% LTV, borrowers with a £200,000 repayment mortgage over a 25-year term can potentially save £3,619 in the first year.”

She urged borrowers to make overpayments on their mortgage, to reduce their debt.

“Mortgage payments are one of the biggest financial outlays a homeowner can have, so it’s a no-brainer to grab a low rate deal while they’re still available.”


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