Mortgage rates have fallen to record lows as the prospect of an interest rate hike retreats and product choice continues to grow.
The average two-year fixed rate mortgage fell to 2.54% in February, down two basis points (bps) since January, when it stood at 2.56%.
The average three-year fix fell below 3% for the first time ever to 2.92%, down nine bps from 3.01%.
Average five-year fixed rate deals also declined by 2bps to 3.25%, according to the Mortgage Advice Bureau’s analysis of figures from Moneyfacts.co.uk.
Head of lending Brian Murphy said the monthly falls are the latest in a downward trend that shows little sign of stopping, with rates falling substantially over the past 12 months.
“Two-year fixed rate mortgages have seen the biggest price cut, falling by 60bps from 3.14% in February 2015, while three-year fixed rates have fallen by 45bps from 3.37%.”
Average five-year fixed rates have fallen also fallen by 45bps from 3.70% since last February, Murphy added.
A borrower who took out a two-year fixed rate in February 2016 will be paying £53 less each month than one year ago, equating to an annual saving of £636.
Borrowers with a three or five-year fixed mortgage are now paying £480 less annually.
Total mortgage numbers rose 3% in February to 17,654, marking a substantial increase of 36% from 12,940 on February 2015.
Murphy said falling rates are helping to ease the impact of rising house prices on borrowers.
“Given the current outlook, low mortgage rates look set to stay on the menu for some time.
“There is an appetite among lenders for business, and consumers are in a good position to reap the benefits of increased competition.”