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Mortgages fall to lowest ever rate, says Moneyfacts.co.uk

Moneyfacts.co.uk says average fixed and tracker mortgage rates have fallen to their lowest level since it first started recording rates in 1988.

It says the rate reductions are down to a reduction in the cost of funding and says lenders have reduced rates across all loan-to-value tiers.

The average two-year fixed rate is now 4.32 per cent, whereas three and five-year fixed rates now stand at 4.92 per cent and 5.29 per cent respectively. The average two-year tracker now stands at 3.37 per cent.

Spokeswoman Michelle Slade says: “An imminent rise in bank base rate now appears unlikely and the cost of funding on the swap rate market has reduced. This reduction in funding costs has led to average mortgage rates falling to their lowest level since Moneyfacts started recording rates in 1988.

“Lenders appear to be applying cuts equally across all LTV tiers, which is good news for first-time buyers, as previously cuts were only being applied to the lower LTV bands.”

However, Moneyfacts says lenders are not passing the full fall in the cost of funding to borrowers.

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