February sees mortgage rates hit record lows

Mortgage rates for two and three-year fixed rate deals fell to record lows this February, new research has revealed.

In what has been reported as a result of the Bank of England’s decision to keep Bank Rate at 0.5% for the 84th consecutive month, mortgage rates fell to record lows in February, following a steady 12-month decline.

The findings, published by the National Mortgage Index, also show that borrowers in February had access to the largest number of products since 2008 and that 70% of mortgage deals were sourced through a broker.

The average rate for a two-year fixed mortgage fell by 0.02% in February to 2.54%, down from 2.56% in January.

An average three-year fixed rate mortgage, meanwhile, fell by 0.09% to 2.92%, down from 3.01% in January.

Five-year fixed rate mortgages were recorded at 3.25% in February, down from January’s 3.27% and nearing the record low of 3.24% last seen in August 2015.

Jeni Browne, head of residential and buy to let lending at Mortgages for Business, said:

“Both prospective and existing homebuyers can benefit from these record low rates, given the excellent remortgage deals out there too.

“The pricing of mortgage deals is influenced by the future expectation for Bank Rate, so while the Bank of England continues to defer a rate rise, these low mortgage rates are set to stay. Add to that the competition in the market, due to the abundance of products available and customers are well positioned to really take advantage of the variety of deals on offer.

“However, the large number and variation of products out there has led to a complex market for buyers to navigate.

The increase in the use of intermediaries shows that, for many this is the best way to approach the market, and the fact that brokers are able to source the best product for their clients’ particular needs, from an ever increasing range of products, shows that this is a trend that is likely to continue.”