Borrowers favour five-year fixed rates over shorter-term deals

 

The Nationwide House Price Index has revealed that over 95% of mortgage borrowers have opted for a fixed-rate mortgage in the past few months, and half of those were five-year fixed deals.

There has been a significant drop in five-year fixed mortgage rates, with the average rate falling 0.19% in the last 12 months. The gap between the average two and five-year fixed rates has narrowed, encouraging borrowers that typically jump from one short-term rate to another to consider fixing for longer.

According to Moneyfacts.co.uk, the difference between the average five and two-year fixed rate on a 95% loan-to-value (LTV) is currently only 0.33%, and the gap is at its narrowest on a maximum 75% LTV at 0.27%.

Darren Cook, finance expert at Moneyfacts.co.uk, said: “It seems that competition within the five-year fixed-rate mortgage sector is pushing the average rate down closer towards the two-year fixed average rate. As a result, the difference between these two average rates now stands at 0.31%, which is 0.11% lower than it was a year ago.”

Reduced monthly repayments

Moneyfacts highlights that with the gap between the two and five year fixed rates narrowing, the difference in the monthly repayments is reducing, too. On a repayment mortgage of £250,000 over 25 years, the average two-year fixed rate repayment stands at £1,115.26, while the average five-year repayment is £1,154.56. The difference of £39.30 per month for an extra three years of financial security will be attractive to many borrowers.

Borrowers might be facing economic uncertainty, but falling rates on longer-term mortgages are cushioning the blow as they choose to lock in for longer.

Highgrove Mews

High Net Yield Freehold Houses

  • Commutable to London (27 mins to central Paddington station)
  • Rental demand extremely strong with large industry presence in Reading
  • Freehold with 4% net yield

£284,955 - £457,000

St Petersgate – Stockport Manchester

New Launch - Stockport Manchester, apartments from £160,000

  • Discounted launch prices from £160,000
  • Excellent transport links with 3 trains per hour to London Euston and only 9 mins journey to Manchester Piccadilly
  • Experienced development team

Assured Rent Housing Association Leases

Assured Rent Housing Association Leases

  • Assured rent & no rental voids
  • Tenant damage cover & newly refurbished inline with requirements of a corporate sitting tenant
  • Free property and lettings management

From £62,000

Emerging Birmingham Commuter Town With Properties From Just £104,000

The emerging Birmingham commuter town where properties are selling in an average of just 24 days

  • A collection of 62 two bedroom apartments and 28 one bedroom apartments.
  • DE14 is one of the fastest selling postcodes in the West Midlands.
  • 23 minute train journey into Birmingham New Street Station.

Properties from £104,000

Mill, Stockport

The Northwest's emerging property hotspot

  • Discounted off-plan 2-bed prices from £162,000
  • Completion date - Q4 2021
  • Rental yields - 6% plus

Discounted off-plan 2-bed prices from £162,000

South Central – Birmingham City Centre Apartments

Highly anticipated 28 storey launch in Birmingham City Centre with an impressive roof garden and communal facilities.

  • 154 units across 28 storeys
  • Residential multi-media community room, gym, roof garden and sky cinema
  • Excellent future connectivity via the metro system to other key transport hubs and locations around the city

from £205,800

ba-

Talk to us

Speak to our UK property experts today: 

+44 (0) 333 123 0320

Open from 9am-6pm GMT

+852 9865 4446

Open from 9am-6pm HKT

Stamp Duty Calculator

.

Unlock members only investment opportunities and full development details. Join now – it’s free, quick and easy.

Login

Not a member? Sign up for free

Limited company mortgages at all-time high in buy-to-let market

Borrowers favour five-year fixed rates over shorter-term deals

Example

By submitting your details via this online form you agree to be contacted via email/phone/SMS by Direct Marketplace Ltd t/a BuyAssociation in relation to property investment and property developments . We do not share your personal details with third parties.  To view our full Privacy Policy click here.