Average two-year fixed rate falls below 5%

| November 23, 2009 | 0 Comments

Moneyfacts.co.uk has revealed that the average interest rate on a two-year fix has fallen below 5% for the first time since June.

Rates peaked at 5.21% in July but despite declining swap rates have only now come down to a typical 4.99% because banks and building societies, fearful of risk, have been upping their margins.

However, Moneyfacts spokeswoman, Michelle Slade, believes that lenders have finally adapted to “the post banking-collapse world” and appear to be relaxing their lending criteria, although rates on fixes over two years have yet to see any benefit.

Ms Slade comments: “Borrowers will be hoping the easing of credit criteria continues and that lenders will start to reduce the large margin for risk they have been taking over the last year.”

Currently, the average margin charged on a two-year fixed-rate mortgage is 3.21% compared with 2.72% in June, according to Moneyfacts data.

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