Fixed rates to plummet as price war continues

Mortgage advisers The Mortgage Advice Bureau who work with Lawrence Rand are predicting that unprecedented interest from borrowers will lead to average rates for 2 and 5-year fixed rate mortgages dropping below 4% by the end of April.

MAB’s National Mortgage Index found that 93% of purchase and 92% of remortgage applications in January saw borrowers opting for fixed rates.

Using data from more than 500 brokers and 800 estate agents the Index also saw the average loan to value for remortgages reach 59.2%, its highest point since October 2011.

Brian Murphy, head of lending at Mortgage Advice Bureau, said: “Generous helpings of Government funding mean lenders are showing more appetite for risk, which is a godsend to anyone wondering where they will find the money for a deposit.

“The best deals are available at low LTVs but as that space becomes increasingly crowded lenders are open to offering better rates in return for less up-front investment.

“There has been little to get excited about around remortgages until recently and just 12 months ago you would struggle to find a deal lower than 5%.

“Now they are closer to 4% and people looking to remortgage will be pretty pleased with the options open to them.”

Despite the influx of lower priced deals homebuyers took on an extra £12,000 in mortgage debt and had to find more than £6,000 extra for their deposits than in January 2012.

The overall growth of purchase deposits was driven by a hefty rise for homebuyers in London who put down an average of £23,179 extra as a deposit in January 2013 than they did last year.