Five year fixed rates lowest since 2007

At 4.27% the typical five-year rate was 0.34% lower than at the start of 2012 and the lowest since MAB started gathering data in June 2007.

It means any consumer who took out a five-year fixed mortgage at this rate will be over £14,000 better off by the end of their fixed term than if they had done so in July 2008, when average five-year rates hit 6.92%.

Brian Murphy, head of lending at Mortgage Advice Bureau, said: “Borrowers would usually expect to pay a premium for the certainty and security that fixed rates offer. But the current climate of incentivised lending means in many cases they are enjoying the best of both worlds.”

Many 60% loan to value deals are readily accessible for up to five years at fixed rates below 3% and at 85% LTV it is possible to secure a deal below 4%.

Record set for fixed rate business

Two and three year rates continued to fall in December to 4.28% compared to 4.40% in November 2012 and 4.52% compared to 4.73% in November 2012 respectively.

Fixed rate deals accounted for over nine in 10 purchase and remortgage applications in the month, the highest share ever recorded by MAB.

The popularity of fixed purchase applications grew for the seventh successive month to a record high of 91.9%.

Fixed deals were also chosen for 91% of remortgage applications, up from November’s 89.6% to the highest figure seen in this index.

Seasonal boost for affordability:

Growing purchase deposits and mortgages meant that, with an average purchase loan LTV of 70.3% in December, the market continued to favour borrowers with significant capital to invest.

Despite a slight monthly fall the average purchase deposit grew by 14.5% (£8,158) overall to £64,325 during 2012, while the average purchase mortgages increased by 8.7% (£5,422) over the same period to £150,427.

In spite of this December saw affordability as a three month average hit its highest point of the year at 20% with the likelihood being that higher value purchases were postponed until the New Year.

Remortgage applications experienced a further drop in the average LTV in December, falling from 56% in November to 53% which was significantly lower than 58% from the start of 2012.

Murphy said: “Buyers may be paying larger deposits but before lamenting their prospects in the current market it is well worth considering the amount of money they stand to save through these attractive rates.

“The level of competition means these favourable conditions are likely to last well into 2013. Whether you are looking to buy a home or remortgage your existing property the prospects of finding an attractive deal are far greater than they were 12 months ago.”