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More choice for borrowers as number of five-year fixed rates doubles

Mortgage borrowers looking for a five-year fixed rate have almost double the choice today than they did five years ago as competition between lenders ramps up.

Data from Moneyfacts.co.uk shows that there are currently 1,542 five-year fixed-rate mortgage products available to borrowers, nearly twice the 796 that were available five years ago, and only five short of the total of the historically more popular two-year fixed rate products.

The most significant increase is in the number of products available with a 75% loan-to-value where there are now 303 deals to choose from, an increase of 165 since September 2014. However, their market analysis shows that an increase in product availability is seen at every loan-to-value tier, benefiting any borrower seeking a longer-term fixed-rate whether they have a 95% LTV or a 60% LTV.

Darren Cook, finance expert at Moneyfacts.co.uk, said: “Two-year fixed-rate mortgage deals have historically dominated borrower market choice. However, with the number of five-year fixes increasing significantly over the past five years, it is clear that borrowers now have an even choice of products available in both the two and five-year fixed-rate mortgage markets.”

Fixed-rate market expected to increase further

Cook goes on to say: “Data recently released jointly by the Bank of England and the Financial Conduct Authority shows that the dominance of fixed-rate mortgage approvals has grown over the past five years. Outstanding balances on existing fixed-rate mortgages constituted 41.66% of the entire market in Q2 2014, whereas this figure has grown to 73.84% in Q2 2019.

“It also appears that the fixed-rate market is expected to increase further still, as latest figures show that 92.36% of all new mortgages advances in Q2 2019 were fixed-rate deals.”

The increased competition between lenders has also seen a fall in the average rates of five-year fixed products, so borrowers not only have more choice if they are looking for longer-term security, but they will benefit from lower rates too.

According to Moneyfacts.co.uk, a borrower looking to move home with a mortgage of £218,000 at 60% LTV for a total 10-year mortgage term, would now only pay £35 per month more for a five-year fixed term compared to a five-year deal, based on the lowest fixed mortgage rates.

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