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Mortgage rates fall to new low

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The average mortgage rates on offer at UK lenders have hit a record low, figures from Moneyfacts have shown.

The number of mortgages available has increased to almost 4,000 after 175 new products were launched in the last month.

This is the second highest total since Moneyfacts started collecting data in 2007.

This increased competition has resulted in lower mortgage rates for borrowers. The average two-year fix has dropped for the ninth successive month to reach 2.87%. This follows a  0.08% fall in the last month.

The two-year tracker has also fallen, dropping down to 2.02%.

Borrowers with all sizes of deposits have benefited from lower rates, the research added.

“Providers are accommodating this demand by improving availability, while the fact that they’re also lowering rates – not only at short-term, low-LTV levels – highlights the fact that they’re looking to compete at all angles to attract as large a section of the market as possible,” Moneyfacts said.

“This is a clear shift from previous norms, as once upon a time, competition was concentrated in a few key areas. This was typically at the lower end (or the less risky end) of the LTV scale, but in the last few years, there’s been a shift towards competition in higher LTV bands, arguably as a result of Help to Buy encouraging lending at traditionally higher-risk levels – great news for first-time buyers!”

Moneyfacts warned that rates would begin to rise at some point and borrowers may want to consider a fixed rate deal to protect themselves against future increases.

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