Five-year fixed mortgage rates have fallen to their lowest level in more than five years, the Mortgage Advice Bureau has revealed.
The latest National Mortgage Index indicates further evidence of recovery in the UK housing market, with the Funding for Lending Scheme believed to be a key driver.
In December the typical five-year fixed-rate mortgage was 4.27%, 0.34% lower than at the start of 2012 and the lowest it has been since the summer of 2007.
The upshot of this is that someone taking out a five-year fix will be more than £14,000 better off by the end of the term than they would have been in July 2008, when the average rate was a whopping 6.92%.
This news has been further bolstered by evidence of increased mortgage activity, which MAB says was up 7.5% in December 2012 compared to the same month in 2011.
The Council of Mortgage Lenders also revealed information this week to back this up. It says gross lending in December reached nearly £11.7 billion, bringing the total for the year to £143 billion – a £2 billion increase on the year before. The CML has also predicted that gross lending will reach £156 billion in 2013.
"We are more positive about the UK housing market and wider economy than a year ago," says Bob Pannell, chief economist at the CML. "House purchase activity was robust in the fourth quarter on the back of better mortgage availability and pricing, and we expect this to continue over the coming months."
Two-and three-year fixed-rate mortgages also fell in December, says MAB, to 4.28% and 4.52% respectively. Fixed-price mortgages now account for 91.9% of purchases.
This article was written for our sister website Money Observer