20th May 2015
Mortgage rates have fallen so much that borrowers are able to secure a five-year fixed rate now for the same price as a two-year fixed rate a year ago.
Locking in for a longer term deal comes at a premium, but figures from Moneyfacts.co.uk, the comparison website show that five-year deals are now cheaper than ever.
Charlotte Nelson, finance expert at Moneyfacts.co.uk, says: “The cost of the average five-year fixed rate mortgage has fallen significantly over the past year with many providers launching the lowest ever rates.
“With the average five-year fixed rate mortgage priced at 3.45% today, this is considerably lower than what the average two-year fixed rate was offering a year ago (3.73% in May 2014).
“In the space of one year borrowers can now secure a five-year fixed rate deal for the same price or lower than its two-year alternative.
“Longer-term fixed rates provide borrowers with extra security, and to be able to secure a five-year fixed deal at two-year prices is unheard of.
“Borrowers coming to the end of their fixed deal or those who are currently sitting on their SVR should seriously consider opting for a new fixed rate now, as rates will inevitably go up at some point in the future.”
Nationwide Building Society is making a series of rate reductions across its mortgage range, cutting selected fixed rate deals by up to 0.30%.
For those with a 10% deposit, 2 year fixed rate products now start at 3.34% with a £999 fee, while 5 year fixed rate deals with a £999 fee start at 3.89%.
For those customers with a Nationwide main current account, there is a range of new rates for the Flexclusive 4 year fixed rate products, with the 90 per cent loan to value (LTV) rate with a £999 fee reduced by 0.20% to 3.74%.
All first time buyers, regardless of product choice, will now receive a £500 cashback. The first time buyer cashback is offered in addition to any further cashback provided through both Nationwide’s Save to Buy, which offers a cashback of up to £1,000 to savers taking out a Save to Buy mortgage, and with Flexclusive mortgage deals, which offer the choice between a £250 cashback or free standard legal work.
Existing mortgage customers benefit from at least an additional 0.10% discount on all new customer rates. Remortgage customers benefit from free standard valuation and the choice between free standard legal work or £250 cashback. The £500 cashback first time buyer cashback will be paid directly to the customer’s bank account within a month of completion.