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Five year fixed mortgages at a low

[ Posted April 24th, 2012 ]

Over the past year the average mortgage rate of a fixed product has fallen down by about .8% dropping overall from 5.6% down to 4.86% which makes a large difference for those in the market for a long term fixed product.

The fall in the five year fixed term should be of interest to savvy homeowners with a mortgage that is on a standard variable rate given the fact that many of the larger lenders and a handful of the smaller lenders have announced that they will increase their SVRs come May 1st.

Moneyfacts.co.uk spokesperson Louise Holmes stated that the average fixed mortgage rate has been coming down over the last few years and they are currently at the lowest that the market has seen them in the past two years.

She added that fixed mortgages are particularly interesting to those that like knowing what their monthly payment is going to be for a certain designated period of time regardless of how the market performs.  She also stated that this makes it easier to play for a financial budget since the repayment amount does not fluctuate over time requiring adjustment in the family budget.

One of the reasons that lenders are able to offer the best mortgage rates on fixed products is due to the fact that the price of lending in the swap rate market has lowered over the last few years helping out lenders that offer long term mortgage products.

Combined with the fact that the Bank of England is expected to keep the interest rate set at the low .5% for at least the rest of the year if not longer, borrowers should take advantage of the low rates while they are still available on the market.

Chief Executive for SPF Private Clients, mortgage broker Mark Harris stated that a five year deal is a logical length of time for the borrower that wants the certainty that comes with a fixed rate mortgage product.

He explained that a two year fix is not going to be that helpful since rates likely will not start to change until the two years are up and added that long term mortgages of ten years or more can be tricky. However, given the fact that there will be changes in the market over the next five years locking into a deal now can be a great way to get low rates and security.

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