Mortgages plunge to cheapest on record: Average rates on two-year fixed deals fall below 2%
Mortgages are at their cheapest on record with average rates on a popular two-year fix falling below 2 per cent.
Just days after Chancellor Rishi Sunak announced a stamp-duty holiday to kick-start the property market, analysis by financial advisers Moneyfacts shows the cost of home loans has hit a low.
But it warned the prospects for first-time buyers struggling to get on the property ladder are more ‘bleak’, as the number of deals for those with small deposits have fallen dramatically.
Cheapest ever: Mortgages rates on a popular two-year fix deals are falling below 2 per cent – their cheapest on record
After hitting record lows in June, the average rates for both two and five-year fixed rate mortgages reduced even further to 1.99 per cent and 2.25 per cent respectively this month.
This is the lowest level since Moneyfacts began collecting comparable data in 2007 – just as the last financial crisis was about to begin.
But the property market is not quite so inviting for first-time buyers, with the report bemoaning a ‘dearth of available products’.
It found that the number of deals for those with a 10 per cent deposit or equity has fallen by 90 per cent during the coronavirus crisis, from 779 in March to just 70 at the beginning of this month – a record low.
The figure beats the previous record low of 71 at the height of the last financial crisis in May 2009.
And there is just one two-year fix available for someone with a 5pc deposit, charging a rate of 3.94 per cent.
As recently as March, there were 137 such mortgages available with an average rate of 3.26 per cent.
But there was some encouragement for first-time buyers yesterday as Britain’s biggest building society announced it is returning to the high risk end of the mortgage market less than a month after pulling out.
Nationwide said it hoped the move would allow more first-time buyers to benefit from the stamp-duty holiday, which eliminates the levy for properties worth up to £500,000 until the end of March.
The stamp-duty holiday could save buyers as much as £15,000 on a home worth £500,000.
Miles Shipside, commercial director and housing market analyst at online estate agents Rightmove, said: ‘The ability for lenders to offer lower deposit mortgages to first-time buyers is critical to helping the market recover more quickly.’