Price wars between lenders have resulted in the difference between two and five-year fixed-rate interest rates on mortgages narrowing to its smallest levels since 2013, according to moneyfacts.co.uk.
Moneyfacts.co.uk analysis, across all deposit sizes, indicate that there is now only a 0.41 percentage point gap between the average two-year fixed-rate mortgage deal on the market and the average five-year fixed-rate on offer.
There is also great news for first time buyers as competition between lenders has meant that the average two and five-year fixed-rates for people with a 5% deposit has dropped. Its the lowest levels since Moneyfacts.co.uk's records started in 2008.
Attitudes are shifting towards longer fixes as homebuyers and remortgagers are increasingly looking to protect their mortgage rate for longer during a time of economic and political uncertainty. Records suggests that, since the start of January, several high street banks including Barclays, HSBC, Lloyds Bank, NatWest and Santander have all cut rates across their range of two and five-year fixed deals.
While it is difficult to predict what the mortgage market may face this year it is still positive to see the rate gap shrink, particularly for those borrowers eyeing up a five-year fixed deal who want to avoid any potential interest rates rises for some peace of mind.
This follows UK Finance's November Trends update where we saw first-time buyers and remortgages continuing to drive the UK housing market towards the end of 2018, as homeowners benefitted from competitive deals and housing schemes. More than 35,000 new first-time buyer mortgages were completed in November 2018, which is up 5.8 per cent when compared with the same month in 2017 and at a value of £6bn. The data showed the average age of a first-time buyer was 30 years with a gross household income of £42,000.
If you would like to see how competitive mortgage rates are at the moment, or know someone looking get their first steps on the housing ladder, then why not give us a call.