Home Owner Loan Rates Reach Record Low
The average interest rate currently being charged by banks and building societies on the home owner loan and mortgage products, has reached its lowest level in 23 years, according to the latest figures from the price comparison site Moneyfacts.co.uk
With the Bank of England base rate of interest for loans remaining at a historically low level of just 0.5 per cent for more than two years now, many borrowers who took out their loan prior to the credit crunch are currently enjoying a particularly cheap loan deal, even if they are on their lender’s standard variable rate loan deal.
But as lenders start to increase levels of competition in the home owner loan market once again, interest rates on new loan deals are falling across the board and as a result of this, new home owner loan rates are now at their lowest level since 1988, when Moneyfacts began keeping records.
The average rate being charged on fixed rate loan deals are now 4.32 per cent for a two year deal, 4.92 per cent for a three year deal and 5.29 per cent for a five year deal. The typical two year tracker loan will now cost 3.37 per cent.
As it looks as though an interest rate increase from the Bank of England is some way of yet, lenders are starting to relax slightly and lower their loan rates accordingly, giving borrowers the opportunity of a cheap loan deal.
Michelle Slade of Moneyfacts said “Lenders appear to be applying cuts across all loan to value tiers, which is good news for first time buyers, as previously cuts were only being applied to lower loan to value bands.”
“While rates may still fall slightly further, it is likely that some lenders will instead opt to make existing competitive deals available to borrowers with smaller deposits. If borrowers delay too long to secure a new mortgage deal, they could find that they miss out on some of the lowest rates ever seen.”
