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Rates plummet during ‘year of the mortgage’

Last year saw all-time lows in the mortgage market, with new borrowers typically hundreds of pounds a year better off now than they would have been 12 months ago.

Competition across all sectors of the market means that rates have plummeted, with one leading analyst terming 2015 as “the year of the mortgage”.

According to the number-crunchers at Moneyfacts, a two-year fixed-rate £200,000 mortgage taken out at the end of the year would be an average of more than £800 a year cheaper than a similar product taken out at the start of 2015.

“When looking back at 2015, it’s difficult to think of anything other than plummeting mortgage rates, which resulted in record lows across the whole of the mortgage market,” says Charlotte Nelson, of Moneyfacts.

“For example, in just one year, the average two-year fixed-rate mortgage fell by a whopping 0.65%.”

With five-year fixed rates also falling, analysts believe many borrowers would do well to switch to a longer-term deal now in order to cushion themselves against future rate rises.

Ms Nelson adds: “The mortgage market has experienced real uncertainty in terms of the timing of a base rate rise, and this is unlikely to end soon.

“The mortgage market is waiting on tenterhooks to see when the Bank of England will raise the rate, and with rumours rife about an increase in 2016, it will prove to be a tense time in the market.

“There may be many uncertainties about the future, but one thing we do know is that these record low rates won’t last forever, so anyone looking for a fixed rate mortgage now should act fast to secure the best deal.”