Property investors are being advised to consider fixing their mortgage rates now, as five-year rates fell to their lowest level in history – and mortgage brokers said they are unlikely to get any cheaper.
It follows a flurry of rate-cutting by banks and building societies, resulting in ten lenders now offering five-year fixed rates below 4%.
Brokers are already reporting a surge in the number of borrowers looking to remortgage from their lender’s standard variable rate.
Rates are not expected to fall further, though, as lenders have little scope for further cuts. Five-year swap rates – the rates that banks use when lending to each other and pricing their mortgages – have now fallen to 2.2%, but lenders still need to make a profit on the rate, and repair their balance sheets.
Borrowers with large mortgages have even paid heavy redemption penalties on existing fixed-rate deals in order to switch to the new lower fixed rates.
