Last Saturday marked seven years since the Bank of England cut their interest rates to a record low of 0.5%.
While this isn’t great for those savings accounts, it is good news for those who are seeking mortgages!
The continued low rates have led to a price war amongst the major lenders, which could wind up saving borrowers hundreds of pounds a year.
The average mortgage rate has fallen by about a third since rates were slashed, with monthly repayments falling by £270 on an average mortgage of £200,000.
Mortgage rates hit an all time high back in 2008, but have continued to steadily fall ever since due to the global recession.
The current record low for a two-year fixed mortgage is 1.05%, set by the Post Office in August of last year, although this could be broken and we could see mortgage rates fall below 1% soon.
In the last couple of weeks we’ve already seen the Yorkshire Building Society cut their two-year fixed rate to 1.14% and the country’s biggest mortgage lender Halifax cut its own two-year rate to 1.64%.
First Direct are also offering extremely low rates with a 1.15% two-year deal, and 2.89% for ten-years which shows that rates are set to fall across the full range of mortgages, even the longer term deals.
According to the Bank of England, the average rate for a two-year mortgage is 1.95%, while a five-year rate is just 2.77%.
To put these numbers into some context, the average rate on a two-year deal in 2008 was 6.75%, meaning monthly repayments nowadays could be as much as 50% less.
While this is all great news to borrowers, it is important to note that lenders are making mortgages harder to qualify for.
Under new rules brought in in 2014, borrowers now have their finances scrutinised more than ever, which you can learn more about in this BBC article.
It’s also worth noting that at some point, the 0.5% interest rate is sure to rise, so make the most of it while it lasts!
One the whole though, there’s no sign that these mortgage rate cuts are likely to slow down, making it as good a time as any to make the jump and look into securing your first mortgage.
If you decide it’s something you want to look into, make sure you get in touch with one of our experts for free, impartial advice from across the market to find the deal that’s right for you.