Interest on five year fixed rate mortgages are at a 6 year low since 2007, according to one Mortgage Advice Bureau. The average interest on a five year fixed deal is now 4.27%, down by 0.34% from the start of 2012.
The findings suggest that those taking out a five year fixed rate deal could be £14,000 wealthier at the end of their fixed term, compared to someone who took out a similar policy in July 2008, when the average interest rate was 6.92%. But, for many who can afford a sizeable deposit, interest on five year fixed rate deals can be as little as 3% with a Loan-to-Value (LTV) of 60%; while an 85% LTV could have a rate of just 4%.
Two and three year fixed rates are also seeing improvements in their average rate, with interest rates falling from 4.40% in November to 4.28% in December on two year deals, and 4.73% down to 4.52% on three year deals, respectively. As fixed rate mortgage deals account for nine tenths of mortgage options on the market, these are significant improvements.
In addition, the average deposit grew by 14.5% to £64,325 by the end of 2012, and the average mortgage size increased by 8.7%. Moreover, the average deposit put forward in December 2012 was 30%. As spending and deposit sizes increase, it looks as if professional mortgages are set to grow in popularity in 2013.