6th February 2015
A race to the bottom for mortgage rates has seen the cost of the average home loan drop by £1,700 in the past month.
The mortgage rate war being perpetuated by banks and building societies means lenders are benefitting from cheaper home loan rates than ever before.
Figures from mortgage broker London & Country show those with just 10% deposits were making the biggest savings.
Calculations for The Telegraph show a family who remortgaged a £200,000 loan would be as much as £1,689 better off over the next five years compared to the deal they would have received a month ago.
Online bank First Direct is offering the best five year rate at just 2.28% and is even offering a 10-year rate locked in at just 2.89%.
HSBC has been offering customers with a 40% deposit a two-year deal at just 1.19%.
Lenders have been encouraged to offer rock-bottom rates after predictions that low inflation means the Bank of England will not increase the base rate, from its six-year level of 0.5%, this year.
Experts told The Telegraph they believe rates could fall even lower, with two-year rates expected to fall below 1% and five-year deals below 2% over coming weeks.
Mark Harris of broker SPF Private Clients, said: ‘Lenders are keen to advance more money this year and they’re cutting their prices to attract customers. Banks will hope to make money selling customers other products such as current accounts and credit cards.’
Aaron Strutt of Trinity Financial said: ‘For fixed rates to go below 1% would be extraordinary, but that now looks likely to happen very soon.’