Trackers and fixed rates near bottom
Rates for two-year trackers, two-year fixed and three-year fixed loans in November were the cheapest since 2007 but may be nearing the bottom, according to the Mortgage Advice Bureau.
MAB’s mortgage index, using data from Moneyfacts.co.uk dating back to 2007, showed average two-year tracker rates dropped by 0.28% in the three months to November 2014, the biggest autumn price cut on record for these products.
It meant that two-year tracker rates have fallen 0.51% in the last year to reach a new post-2007 low of 2.38% in November, beating October’s previous record of 2.51%.
Average two-year fixed rates fell 0.27% in the three months to November – the biggest autumn price drop since 2008 – to a record low of 3.44%. Three-year rates also reached a historic low of 3.52% having dropped 0.27% since August: the biggest autumn discount since 2012 under the Funding for Lending Scheme.
Five-year fixed rates also fell from August to November, but at 3.96%, they remained 0.1% higher than in November 2013 and 0.13% higher than the post-2007 low of 3.83% set in August 2013.
November 2014 saw 92% of homebuyers applying for fixed rate products compared with 94% a year earlier, while 87% of remortgaging homeowners opted to fix compared with 93% in November 2013.
Brian Murphy, head of lending at Mortgage Advice Bureau, said: “There may be room for further discounts, but as we edge closer to an interest rate rise – currently expected in autumn 2015 – it’s likely that we will soon hit the bottom of the curve.
“Fixed rates remain the product of choice among most consumers and are likely to become even more popular as the Bank Rate rise approaches.”