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Fixed-rate mortgage cost begins to drop
The average cost of a two-year fixed-rate mortgage has fallen below 5 per cent for the first time in five months.
People who want to fix their mortgage rate for two years are now typically paying 4.99 per cent, according to financial information group Moneyfacts.co.uk. The group said it was the first time average rates on a two-year fixed-rate mortgage had been less than 5 per cent since June 23.
The cost of the deals rose sharply during July to peak at 5.21 per cent as lenders responded to rising swap rates, upon which the mortgages are partially based.
But they were less quick to react to subsequent falls in swap rates, instead increasing the margins they charge on the deals.
The average margin charged on a two-year fixed-rate mortgage is now 3.21 per cent, up from 2.72 per cent in June.
But there has been a flurry of lenders cutting their rates in recent weeks as competition slowly begins to return to the market.
Michelle Slade, spokeswoman for Moneyfacts.co.uk, said: "Borrowers are finally starting to see more positive news coming out of the mortgage market."
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Thursday 24 May 2012
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