Average mortgage rates now at 7 year historic low
7 years ago the Bank of England dramatically lowered the base interest rate to 0.5% which was great for borrowers but not savers. Last week many lenders lowered their mortgage interest rates in a fight for customers.
Halifax has cut is first time buyer and homemovers rate by 0.3% to 1.64% for a 2 year fixed and 2.24% for a 5 year fixed rate.
The average mortgage rate over the last 6 years have dropped by a third and the average homeowner with a £200,000 mortgage saves £270 per month compared to 6 years ago. Over the last 7 years the average 2 year fixed deal has dropped 50% from a rate of 3.98% to 1.95% slashing the cost of a mortgage and driving up house prices.
David Hollingworth of mortgage broker London & Country warned that borrowers should not get complacent, and while the base rate has languished at 0.5% for many years, at some stage it will rise. “It is wise to prepare for this change, and take action. This includes taking the opportunity to cut the rate you’re paying with ongoing competition between lenders and attractive deals around. Also, prepare for a rise by overpaying to get rid of debt more quickly.”
It is prudent for homeowners and landlords to review their current mortgage deals to ensure they are the best rates and to fix to protect themselves from future interest rate rises.