Christmas price war sees mortgage rates hit 1.05%

A CHRISTMAS mortgage price war has dragged the cost of home loans to record lows.

A slowdown in the property market has fuelled competition among high street lenders, forcing them to offer the cheapest ever deals to attract wary borrowers.

Average rates for five-year, ten-year and even fifteen-year mortgages are all at the lowest level on record, while two-year fixes are close to record lows.

The competition means someone can fix their mortgage for as little as 1.05 per cent for two years, 1.44 per cent for five years, 2.2 per cent for ten years, and 2.55 per cent for 15 years, according to analysis by Moneyfacts.

A first-time buyer with a deposit of just 5 per cent can get a rate of 2.75 per cent in a five-year fixed-rate mortgage, falling to 2.39 per cent on a two-year fix.

And for those who can stump up a 40 per cent deposit, the best two-year deal comes from Halifax with a rate of 1.05 per cent.

David Hollingworth, of mortgage broker London & Country, said: ‘Borrowers have never had it so good... Some movers are sitting on their hands as there is not as much activity as anticipated. This only increases the need for lenders to beat their rivals to the punch.’ Rachel Springall, of Moneyfacts, said: ‘This mortgage rate war in the run-up to Christmas may well be attributed to providers’ appetite to keep the mortgage market moving and to meet end-of-year lending targets.’

Last week Moneyfacts said the average rate on ten-year fixed rate mortgages had fallen to a record 2.76 per cent. The cheapest deal is 2.2 per cent from Coventry, Yorkshire and Chelsea building societies.

Virgin Money offers the best fifteen-year fixed rate deal at 2.55 per cent and there are also cheaper rates for first-time buyers. The average two-year fix with a 5 per cent deposit has fallen to 3.25 per cent – from 4.21 per cent in 2017. The best rate is 2.39 per cent from Progressive Building Society.