The year of 2015 will been seen by many as the year of the mortgage: competition increased until it reached boiling point, with all sectors of the market becoming embroiled in a fight for borrowers. As a result, rates plummeted until they eventually reached new all-time lows.

Indeed, calculations from Moneyfacts.co.uk based on the average two-year fixed rate mortgage show that a new borrower would now be £805.44* a year better off than they were a year ago.

Charlotte Nelson, Finance Expert at Moneyfacts.co.uk, said:

“When looking back at 2015 it’s difficult think of anything other than plummeting mortgage rates, which resulted in record lows across the whole of the mortgage market. For example, in just one year the average two-year fixed rate mortgage fell by a whopping 0.65%.

“As a result of this fierce competition, borrowers are now significantly better off, and with five-year fixed rates also falling, many may now be considering fixing to a longer-term deal to protect them from rate rises in the near future.

“First-time buyers have had a good year with the number of products at 95% loan-to-value (LTV) increasing from 179 in 2014 to 249 today. Rates have also fallen in this key area, with the average two-year fixed rate at 95% LTV dropping from 5.22% to 4.29% over the same period. This is all down to the influence of the Help to Buy mortgage guarantee scheme, which has made it socially acceptable to lend at this high loan-to-value again.

“The mortgage market has experienced real uncertainty in terms of the timing of a base rate rise, and this is unlikely to end soon. The mortgage market is waiting on tenterhooks to see when the Bank of England will raise the rate, and with rumours rife about an increase in 2016, next year will prove to be a tense time in the mortgage market.

“There may be many uncertainties about the future, but one thing we do know is that these record low rates won’t last forever, so anyone looking for a fixed rate mortgage now should act fast to secure the best deal.”

*Calculations based on the average two-year fixed rate for a £200,000 loan over 25 years on a repayment only basis.

www.moneyfacts.co.uk - The Money Search Engine

Moneyfacts.co.uk is the UK's leading independent provider of personal finance information. For the last 20 years, Moneyfacts' information has been the key driver behind many personal finance decisions, from the Treasury to the high street.

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