The average rates on fixed rate mortgages have been slowly decreasing over the past few months, which must come as good news for contractor mortgage seekers.
According to the Bank of England, borrowers could get a two year fix at 3.36% in June, down from 3.51% in May and 3.67% in April. Average fixed rate mortgages charges are now at their lowest rate since data started to be collected in January 1995. Prior to 1995, very few people took out a fixed rate mortgage and some experts believe 3.36% is the lowest rate ever seen.
Mortgage lending institutions have been consistently reducing the rates on their fixes over the past months as they fight to creep up the best buy league tables. This is of course good news for families who have found their spending power eroded by government spending cuts and increased inflation.
Melanie Bien, a director at Private Finance, said the latest Bank of England figures show that cheap deals are available. She also pointed out that people who can afford to put down large deposits can reduce their monthly repayments dramatically.
The Bank of England slashed the base rate to 0.5% early in 2009. The high street banks did not pass this reduction on to their customers straight away because they had to recoup some of their bad losses. However, most banks have now moved on and are looking to increase their share of the mortgage market. Experts now say the chances of an early base rate rise seem increasingly unlikely and if that’s the case homeowners could possibly end up seeing even lower interest rates.
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