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Tuesday 26th of May 2009
April 10, 2009

Mortgage rates at five-year low as interest rates held


by Peter Charalambous
Mortgage rates at five-year low as interest rates held

The Bank of England’s sixth consecutive interest rate cut is finally having an impact on the housing market as interest rates on the nation’s five most popular mortgage deals are at their lowest for the last year and a half.

The Bank of England’s latest figures released yesterday shows that the average two-year fixed-rate deal available to borrowers, who have a 25 percent deposit, has fallen from 4.35 percent to 4.01 percent in the last two months.

In comparison, the average rate was 3.87 percent in July 2003.

Fixed rate deals are now far more attractive as longer-term mortgage fixes protect against the threat of rising interest rates. The Bank of England’s monetary policy committee’s (MPC) meeting has resulted in maintaining the record low interest rate of 0.5 percent.

Furthermore MPC members have decided that the BoE is to continue with the £75 billion asset purchase programme and have thus far purchased £26 billion worth of gilts and corporate bonds.

Following the decision, mortgage lenders have reacted by lowering fixed rates, although many analysts have been critical of the fact that banks and building societies have not been passing the full rate cuts to consumers.

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