Fixed rate Friday price war breaks out
Friday has seen the launch of Chelsea Building Society’s market leading 1.89% 2-year fixed rate mortgage and the lowest ever 5-year fixed rate mortgage at 2.69% from First Direct.
The lenders join HSBC, Yorkshire Building Society and Norwich & Peterborough in offering fixed rate products at less than 2%.
Brian Murphy, head of lending at Mortgage Advice Bureau, said: “Talk of fixed-rate Friday with the lowest ever 2 and 5-year rates appearing on the market come as no surprise after recent activity from both direct and intermediary lenders.
“Rates have been dropping consistently and our National Mortgage Index found fixed rate deals boomed in popularity during 2012 and continued to soar in January.
“In the second half of 2012, fixed rates were chosen for 86% of all purchase mortgage applications, and the average five-year fixed rate for borrowers in both December and January was the best we have ever seen.
“It’s little wonder that more than one in ten (93%) purchase borrowers opted to fix last month.
“For new and existing homeowners, the fixed rate price war is brilliant news.
“In the past borrowers have effectively had to pay a premium for the benefit of security that fixed rates provide.
“But healthy competition and incentivised lending means that is no longer the case, and with lenders looking to increase their lending volumes in 2013 I am sure we will see even greater competition and therefore even more favourable deals appearing in the weeks ahead.”