18 Mar 2019

Mortgage rates nearly halved since worldwide financial crisis

Mortgage rates nearly halved since worldwide financial crisis

Mortgage rates have now nearly halved since the worldwide financial crisis.

Financial services company Moneyfacts also says that heightened competition among lenders is encouraging more people to get onto and move up the housing ladder.

The new Moneyfacts UK mortgage trends treasury report has analysed the market in the last decade.

Fixed rates

The average two-year fixed mortgage rate has fallen in that period from 4.79% to 2.49% today, with the typical five-year fixed mortgage rate down from 5.62% to 2.89% and the average two-year tracker rate diving from 3.87% to 2.09%.

Moneyfacts also point out that these rates are just averages, with the best rates available being far lower.

Not only that, but intensifying competition to attract new borrowers has seen product availability soar, particularly in the first-time buyer sector, with the number of mortgages available at 95% loan-to-value (LTV) increasing from only three to now stand at nearly 400 today.

Darren Cook, a finance expert at Moneyfacts, said: "It would have been difficult to predict 10 years ago that we would ever see mortgage rates at historic lows and product numbers at record highs, with providers now vying to compete for new business across most LTV tiers.

"In particular, a decade ago, providers did not seem to want to lend to borrowers who could only raise a small deposit of 5%, with only three products available to those with a 5% deposit in March 2009.

"However, providers have since adapted to the new post-crisis mortgage environment, and today, the same type of borrower has the choice of 391 different products."

High-deposit borrowers

Moneyfacts says it isn't just low-deposit borrowers who can benefit either, as product numbers have also increased significantly for those with more money behind them.

Borrowers with a 40% deposit/equity now have more than double the number of mortgages to choose from than a decade ago, increasing from 272 to 588 products, giving the ideal combination of more choice and lower rates.

But one figure that has gone up slightly over the decade is the average standard variable rate (SVR). Rather than falling, it's increased by 0.12% to 4.89% since 2009.

Moneyfacts points out this highlights the growing need for homeowners to consider remortgaging rather than reverting to their lender's SVR.

Darren added: "During the past 10 years, not only have the two and five-year fixed mortgage rates dropped, but the gap between the two has more than halved, falling from 0.83% in 2009 to stand at a difference of only 0.4% today.

"This could be a significant factor for borrowers when considering whether to fix for the short or longer-term, especially with the current economic uncertainty."

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