Mortgage rates have dropped to the cheapest on record, according to figures released by the Bank of England this morning.
The overall interest rate on new mortgage lending in the final three months of 2015 fell to 2.71 per cent, the lowest since the series began in 2007.
The interest lenders are making on the total stock of mortgages is now only 3.07 per cent, also the lowest since 2007.
Borrowers are taking advantage of record-low mortgage rates by locking them in with fixed rate deals. The proportion of new mortgage lending that was fixed rate rose to 84.1 per cent in the final three months of 2015, up from 80.7 per cent in the previous three months.
“The base rate has now been at 0.5 per cent for seven years, meaning many recent borrowers have never experienced an increase in their monthly mortgage rate. However, borrowers are still opting for the security of locking into rock-bottom rates before they disappear, with the proportion opting to fix rising by over three per cent in the final quarter of 2015," said Brian Murphy, head of lending at the Mortgage Advice Bureau.
“Borrowers who haven’t yet managed to save for a deposit may face more difficulties. The number of loans with a higher loan-to-value (LTV) ratio has been declining – meaning borrowers have to raise larger deposits in order to access the housing market."