by Mark Johnston
A new report published by the UK central bank, the Bank of England shows that average rates for fixed rates are as low as 3.36 percent. The data suggests that those in the UK with a 25 year mortgage on a two year fixed rate have average rates of 3.36 percent in the month of June.
Last month the same report showed average fixed rate mortgages at 3.51% down from the month before where they were 3.67%. Industry commentators have noted the steady decline which is the lowest levels since January 1995 when data on average fixed rate mortgage began to be collected.
Some experts are even suggesting that despite having no data from before 1995, they believe that 3.36 percent may be the lowest rate ever since very few borrowers took out fixed rate mortgages before this time.
Over the past months mortgage lenders have been reducing fixed rates and fighting to make the best buy tables which have pushed rates below. The reductions come off the back of many mortgage lenders failing to meet their targets and take as big a proportion of the market as they set out to.
With all the negative news following the financial crisis this is welcome good news in a tide of bad. Many families have found that their monthly income has reduced over the years following the financial crisis and lower mortgage rates help to balance this.
Director at the broker Private Finance, Melanie Bien said: “These figures show that there are some very cheap deals around and if you have a good sized deposit you can dramatically reduce your monthly mortgage payments. Some people have absolutely benefited from the crisis.”
Following the financial meltdown the Bank of England slashed its rates to the record low of 0.5% which have stayed there for the last few years. The deduction originally was made to help struggling families straight after the crisis but many analysts have been surprised to see the base rate remain so low. Although the base rate doesnt always have an immediate impact on fixed rate mortgages the sustained period of low rates seemed to have had some sort of impact. Initially most banks recovering from the banking meltdown were very reluctant to lend more until they could unwind some of the bad lending of the past but now most financial institutions have posted bad losses and moved on and are now looking to make a come back in the mortgage market. This meant that fixed rate were set higher than before especially for those that didn’t have the cleanest of credit histories and massive deposits.
Over the last few years mortgage rates especially fixed rates have increased and decreased showing the volatile market and the cost of swap rates. But now banks are in direct competition with each other and are fighting for a bigger share of the market.
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