Is this the end for record-low five-year fixed rate mortgage deals?

7th September 2015


Over the past year borrowers have been treated to record low mortgage rates but new research claims that the lowest five-year fixed rates may already be a thing of the past.

With talk of a base rate rise in the near-future reaching fiver-pitch, experts are starting to see an end to the rate-cutting trend.

The table below from highlights the lowest ever rates recorded, and it is clear to see that the days of all-time low rates have been and gone.







Lowest five-year fixed rate at 75% LTV 3.28% 2.49% 2.44% 2.44% 2.48%
Lowest five-year fixed rate at 70% LTV 3.18% 2.49% 2.34% 2.34% 2.43%
Lowest five-year fixed rate at 65% LTV 2.89% 2.19% 2.14% 2.14% 2.34%
Lowest five-year fixed rate at 60% LTV 2.99% 1.99% 2.09% 2.23% 2.29%       Compiled: 7.9.15

Charlotte Nelson, finance expert at asserted that while competition in the mortgage market remains high, “it is clear that record low rates are starting to disappear”.

She added: “Speculation of a base rate rise has affected wholesale costs, so providers have had little option but to raise their rates. Five-year fixed rates have been particularly affected as the likelihood of a base rate rise within the next five years is high. For instance, the average five-year fixed rate at 60% loan-to-value has increased from 2.54% to 2.66% in the space of just two months.”

Nelson also highlighted that borrowers have been in the habit of fixing for two years at a time, with many preferring to re-evaluate their deal on a regular basis. However, committing to a low five-year deal now is likely to pay off if base rate does rise – especially if there is a set of consecutive increases.

For example, a small rise of just 0.25% on today’s average standard variable rate (SVR) of 4.84% would cost borrowers an extra £261.72 a year.

She said: “Borrowers might feel as though they blinked and missed the lowest rates on the market as some deals only lasted a couple of months before they were withdrawn. For this reason, borrowers need to galvanize themselves now if they want to make the best of the low rates that are still around. Long-term fixed mortgage rates are still very low in comparison with a year ago, so borrowers who are sitting on their SVR or coming to the end of their mortgage deal need to decide whether they are willing to miss the opportunity to fix to a low rate.”

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