Fixed mortgage rates
hit record low
Continuing competition in the housing market dragged average interest rate on short-term fixed-rate mortgages down to a record low in May, figures have shown.
According to Bank of England figures, a borrower with a 25% deposit was charged an interest rate of 3.8% on a two-year fixed-rate deal in May, the lowest level since the Bank's records began in 1995.
There has been a steady fall in rates on the loans since last September, when they reached 4.47%, according to the Bank's records.
Five-year fixed-rate mortgages for those borrowing 75% of their home's value dropped to 5.39% from 5.5% in April. The May figure was the lowest since May 2009.
There was also a fall in tracker mortgages, recording 3.7% in May from 3.79% the previous month.
Fixed rate bonds - the most competitive area of the savings market - recorded a fall in average returns to a new record low of 2.29%, the ninth consecutive month in which they have either fallen or remained the same. Less than half the returns of 5.32% offered in May 2008 are being paid on the bonds now.
Other segments of the savings market reported very little change, with the average rate paid on a branch-based instant access account remaining stable at a record low of 0.12%, while that on ISAs and on notice accounts also remained firm at 0.45% and 0.67% respectively.
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