Mortgage price war still in its infancy
News Article Date: Wednesday 04th of November 2009
High-profile rate cuts by leading lenders have given a welcome boost to mortgage customers, but average best buy fixed-rate deals are still more expensive than in March this year, according to Evaluate Technologies.
Fixed-rate best buy deals in March – when the Bank of England cut the Base Rate to a historic low of 0.5% - were 4.37% across two, three and five-years compared to 4.9% now, the independent mortgage comparison service said.
The good news though is that best-buy variable deals have fallen from 4.4% in March to 3.4% now for borrowers with a deposit of 25%. And Evalulate Technologies believes lenders still have a long way to go with rate cuts despite recent high-profile announcement from the likes of Nationwide, Northern Rock, Abbey, Alliance & Leicester, the Post Office and Cheltenham & Gloucester.
Its analysis shows the cheapest fixed-rate deals were available in May and June with average two-year deals hitting a low of 3.52% while three-year deals were at their lowest in June at 4.02%. The rates on five-year deals have consistently crept up since March.
Julie Speed, national accounts director at Evaluate Technologies, said: “The recent round of rate-cutting is very welcome as it confirms that lenders are now starting to compete again on price.
“There still appears to be plenty of room for manoeuvre though and lenders have a long way to go before rates are even back to where they were in March particularly on fixed-rate deals. Borrowers are paying a high price for certainty by opting for fixed-rate deals currently.
“The FSA’s mortgage market review has heralded a return to sensible affordability rules and it is clear that at 75% LTVs lenders can afford to cut rates while still being entirely responsible.”
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