The cost of borrowing has reduced by half in the last decade with competition encouraging more on the housing ladder.
Research from the latest Moneyfacts UK Mortgage Trends Treasury Report shows first time buyers, home movers and remortgage buyers have gained from mortgage rates halving since March 2009.
The cost of a two-year fixed mortgage rate has reduced from an average 4.79% after the financial crisis to 2.49% today.
With greater competition the number of products available have soared with the 95% loan to value (LTV) increasing from 3 a decade ago to 391.
Lower mortgage rates also benefit buy-to-let investors as they can remortgage to reduce the cost of interest repayments to lenders.
Much bigger choice for buyers
The bank of England has reduced the base rates to reach 0.50% in March 2009 rising to 0.75% in August 2018 with mortgage rates remaining low for buyers.
The following table from Moneyfacts shows the change in mortgage rates over the decade and number of products available.
| Products | Mar 2009 | Mar 2019 |
|---|---|---|
| 2-year fixed rate | 4.79% | 2.49% |
| 5-year fixed rate | 5.62% | 2.89% |
| 2-year tracker rate | 3.87% | 2.09% |
| Standard variable rate | 4.77% | 4.89% |
| 95% LTV products available | 3 | 391 |
| 60% LTV products available | 272 | 588 |
Darren Cook finance expert at Moneyfacts said, it would have been difficult to predict 10 years ago that we would ever see mortgage rates at historic lows.
Product numbers are at record highs with providers now vying to compete for new business across most LTV tiers, says Mr Cook.
After the financial crisis there were only 3 products with a 95% loan to value requiring a 5% deposit which has now increased to 391 giving first time buyers more choice.
With the return of confidence product choice has increased to 391 and for homeowners with larger deposits and only 60% loan to value the choice has doubled from 272 a decade ago to 588.
For home movers wanting to trade up to a larger property, the fall in mortgage rates helps to reduce the monthly repayments making it more affordable to move.
For older equity release mortgage buyers the number of products have also increased and fixed rates can be secure from interest rates of 3.5% upwards without any evidence of earnings.
Interest rate costs reduced significantly
The cost of the 2-year fixed rate has reduced to 2.49% and tracker rates have also reduced from 3.87% to 2.09%.
Longer term mortgages have also reduced with the average 5-year fixed rate falling from 5.62% in 2009 and is now at 2.89%.
The long term rates are only 0.4% higher than the short term rates, something home movers and remortgage buyers can consider for their next mortgage deal in the current economic uncertainty.
Average standard variable rate (SVR) have remained relatively static and is slightly higher rising from 4.77% over the past decade to 4.89%.
Any remortgage buyers currently on their lenders standard variable rate, switching to a new mortgage deal would help them to reduce the cost of monthly repayments.
Although you can benefit from switching your mortgage, stricter lending criteria means lenders will check your income and outgoings must ensure you can afford the repayments now as well as in the future, says Mr Cook.
What are your next steps?
Speak to our LCM mortgage advisers if you are planning to move home, buying your first home, remortgaging your existing home to a new cost effective mortgage deal or are a buy-to-let investor.
For equity release buyers our London City Mortgage brokers can recommend lifetime mortgages allowing you to receive cash from your property to help maintain your standard of living as costs rise or buy a more expensive home.
Start with a free mortgage quote or call us and we can take your details. Learn more by using the mortgage calculators, equity release calculator and property value tracker chart.
