Five-year fixed rate mortgage rates fall back to record low levels

| October 14, 2012 | 0 Comments

Simon Lambert

05:28 EST, 13 October 2012


09:00 EST, 14 October 2012

A fresh burst of mortgage cuts have seen rates for the best borrowers fall back to near record lows, with a new five-year fixed rate launched today at just 2.99 per cent.

Borrowers hoping to bag Chelsea’s BS’ new five-year fix at 2.99 per cent will need a 30 per cent deposits and must pay a £1,495.

It is the latest in a series of cuts that have delivered a host of five-year fixed deals offered below the 3.5 per cent benchmark.

Mortgage cuts: Fresh burst of rate cuts means that rates are back near record lows

Mortgage cuts: Fresh burst of rate cuts means that rates are back near record lows

Renewed competition for borrowers and the cheap funding being handed to banks and building societies by the Bank of England has delivered another mini-mortgage price war.

Major lenders including HSBC, Nationwide and Yorkshire BS have all dropped rates on their best deals, while Tesco Bank, which recently joined the mortgage fray, has also delivered cuts.

Chris Smith, Chelsea direct mortgage manager, said: ‘The markets are pricing into swap rates the possibility of a Bank of England base rate reduction in November and as a result we have reduced our mortgage prices to ensure our members benefit.’

Tumbling rates are once again delivering the most benefit to borrowers with big deposits, but those with less equity have also seen costs reduced.

Mortgage industry experts say that cuts are being influenced by the arrival of the £80bn Funding for Lending scheme, which gives lenders access to cheap money to lend to homeowners and businesses and also a period of relative calm in the Eurozone and banking storm.

David Hollingworth, of independent mortgage brokers London and Country, said: ‘I think it’s fair to say that Funding for lending will have had some effect, but it is almost impossible to say how much is down to it.

‘There’s a sense of much more competition. With the flurry of repriced deals lenders are jockeying for position.’

While none of the five-year fixed rates being offered can quite match the record low deals below 3 per cent offered in summer by HSBC, Santander and RBS, borrowers are being offered very tempting five-year fixed rates.

The pick of the bunch, alongside the Chelsea BS deal, comes from its stablemate Yorkshire BS, which is offering borrowers with 25 per cent equity a 3.29 per cent five-year fix with a £995 fee.

That is higher than Tesco’s 3.19 per cent and RBS’ 3.09 per cent but both of these demand 40 per cent deposits and command bigger fees of £1,100 and £2,195, respectively.

For those who can raise a 15 per cent deposit, Co-op Bank has a five-year fixed rate at 3.99 per cent with a £999 fee, while at the 10 per cent deposit level Nottingham BS has a five-year fix at 4.74 per cent.

Mr Hollingworth says that five-year fixes have become increasingly popular as borrowers look to lock-in for longer and the gap between their rates and those on shorter two or three year fixes is narrow.

As a point of comparison, Yorkshire BS is currently offering a two-year fix for those with a 25 per cent deposit at 2.64 per cent with £995 fees.

The selection of low rate mortgages on offer do come with the catch of higher fees, however, and more lenders are now offering better rates to current account holders, or in Nationwide’s case, existing borrowers remortgaging.

Nationwide’s best five-year fixed rate at 3.39 per cent is offered to existing borrowers, others are only offered a rate of 3.49 per cent. The building society giant also offers the chance to nab a significantly lower rate by fixing for four years rather than five.

Its four-year fix at 2.89 per cent is offered to FlexAccount holders who are also existing borrowers, new borrowers must pay 2.99 per cent. It is on offer to those with a 30 per cent deposit paying a £999 fee

The comments below have not been moderated.

mark78 , Sunny Suffolk, 14/10/2012 14:10@@@@ My post states 8.1x average salary for the average house as stated in the article – I never said the cheapest houses!


Salisbury, United Kingdom,
14/10/2012 16:25

badger, chesterfield, 14/10/2012 7:33@@@@@ Do you know where I am posting from ? The days are long and the nights are longer – Do you begrudge service men women the internet? Ignorance is bliss!


Salisbury, United Kingdom,
14/10/2012 16:23

BTW you want to check out senior officer salaries on Google – I have been a higher rate tax payer for over 15 years!!- Phil , Salisbury, United Kingdom, 14/10/2012 13:20
Which begs the question, what you do to merit that salary. Especially when you seem to spend 7 days a week on here. Yet another spare civil servant I fear.


14/10/2012 15:33

Interesting use of statistics there Phil, but if you are saying the average salary up North then at least use the average house price up north, which is a lot lot less than £162k in most areas.


Sunny Suffolk,
14/10/2012 14:10

Quentin , Cheshire, 14/10/2012 00:55@@@@@@@ Here is an extract from the National Housing Federation “With the average North West wage standing at £19,828, an average house costs 8.1 times the average income@ where on earth do you get your 46K from ? BTW you want to check out senior officer salaries on Google – I have been a higher rate tax payer for over 15 years!!


Salisbury, United Kingdom,
14/10/2012 13:20

People commenting about property being overpriced, what are you looking for?……- DB , London, United Kingdom, 14/10/2012 11:36############# A long term job that provides a wage large enough to pay a mortgage and all the other household bills maybe

frankie mcgill

14/10/2012 12:41

People commenting about property being overpriced, what are you looking for? People saying property in London is too expensive, where are you looking? Reality is if you want to buy what everyone else wants you’ll never afford it because there is too much demand e.g. central London place or riverside development. However, move away from these areas and you’ll get 3 bed semis for less than 250k in Ilford or ex local authority flats from 100k. It’s your choice, but stop expecting similar properties in Marylebone to be the same price because it’s just not going to happen. It’s all about location and supply and demand.


London, United Kingdom,
14/10/2012 11:36

The whole point is property is vastly overpriced and it is being artificially kept high to keep the banks books in balance.

royston amphlett

bournemouth, United Kingdom,
14/10/2012 11:23

So what about the folk who have only got say a 10% deposit like me? excellent credit rating, never missed a payment in my life but still being penalised to subsidise them with larger deposits and perhaps who are less reliable or with poor credit ratings. unfair system.


14/10/2012 10:21

@ Phil Salisbury, average family income in Northwest is 46k, outside SE houses are affordable, and mortgages are at record lows, it’s a great time to buy! Sorry you perhaps don’t earn enough to buy!


14/10/2012 09:15

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