Mortgages

Mortgage rates halve since financial crisis: Moneyfacts

The number of products at 95% LTV has also soared from just 3 in March 2009 to 391 today.

Rozi Jones
|
11th March 2019
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"It would have been difficult to predict 10 years on from the financial crisis that we would ever see mortgage rates at historic lows and product numbers at record highs"

Mortgage rates have nearly halved in the ten years since the onset of the financial crisis, according to the latest Moneyfacts data.

The average two-year fixed mortgage rate has fallen from 4.79% in March 2009 to 2.49% today, while the average five-year fixed rate has fallen from 5.62% to 2.89%.

One figure that has remained fairly static over the decade however is the average standard variable rate, having only increased by 0.12% since 2009, from 4.77% to 4.89%.

As well as falling rates, competition between lenders to attract first-time buyers has caused the number of products at 95% LTV to soar from just 3 in March 2009 to 391 today.

Product numbers have also increased significantly at lower LTV tiers, with the number of 60% LTV products doubling over the past decade from 272 to 588.

Darren Cook, finance expert at Moneyfacts, said: “It would have been difficult to predict 10 years on from the financial crisis that we would ever see mortgage rates at historic lows and product numbers at record highs, with providers now vying to compete for new business across most LTV tiers.

“In particular, a decade ago, providers did not seem to want to lend to borrowers who could only raise a small deposit of 5%, with only three products available to those looking for a product at the 95% LTV tier in March 2009. However, providers have since adapted to the new post-crisis mortgage environment, and today, the same type of borrower has the choice of 391 different products.

“During the past 10 years, not only have the two- and five-year fixed mortgage rates dropped, but the gap between the two has more than halved, falling from 0.83% in 2009 to stand at a difference of only 0.4% today. This could be a significant factor for borrowers when considering whether to fix for the short or longer-term, especially with the current economic uncertainty.

“Borrowers must be aware that, despite the increase in product availability and average rates reaching record lows, during the past decade the Financial Conduct Authority has introduced clear affordability measures that mortgage providers are required to follow and, as a result, lending criteria is much stricter than it was before the financial crisis."

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