New figures from the Bank of England have revealed that tumbling mortgage rates are shaving hundreds of pounds a year off homeowners’ mortgage payments.
As rates are cut to record lows thanks to what the Daily Mail calls “an aggressive mortgage war”, borrowers are the big winners as the cost of home loans continues to fall. Experts also believe that there could be further cuts to come as the mortgage price war continues.
New Bank of England figures have revealed that, for the first time, the average five-year fixed mortgage rate has fallen below 3%, while the average two-year fixed rate has dropped below 2% for borrowers with a 25% deposit. On a typical £200,000 mortgage, the reduction in rates means that annual payments are now up to £1,400 less than a year ago.
The official data shows the average two-year fixed rate for someone with a 25% deposit in April was 1.95%, down from 2.54% a year earlier. On a £200,000 mortgage over 25 years this equates to an annual saving of £700. The average five-year fixed with the same deposit fell from 3.69% in April 2014 to 2.93% just a year later, chopping £967 off someone’s yearly mortgage payments.
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