Mortgage blog: Why you should celebrate the 25th birthday of the fixed-rate mortgage

Posted 16 July 2014

If you want a fixed-rate mortgage you now have a dizzying choice of over 2,000 deals. However, a quarter of a century ago you would have had a choice of barely half-a-dozen products, with the best deal available at an eye-watering 12.4%.

This year marks the 25th birthday of the fixed-rate mortgage. They are so common these days that it's hard to imagine a time when they weren't around. In June 1989 the best fixed-rate mortgage was a three-year deal priced with the National Westminster Bank at 12.40% while a similar deal from the National Home Loans Corporation was available at 12.99%.

Back then, the average house price (according to the Office for National Statistics) stood at £55,000, while inflation, measured by the Retail Prices Index (RPI) was 8.3% compared to 3.3% now. And, the Bank of England base rate stood at 14%, a far cry from its record low of 0.5% today.

In the intervening quarter of a century the mortgage market has changed beyond recognition. While there were just seven fixed-rate deals in 1989 there are now 2,181 products, outnumbering variable-rate products by nearly three to one.

Sylvia Waycot, editor at, says: "If you wanted a fixed-rate mortgage from your bank or building society in July 1989 you had a choice of just seven products, mainly three-year deals. At the time early redemption charges could be quite high which made some borrowers wary of longer tie-ins.

"Fast-forward to today, however, and there are 2,181 fixed-rate mortgages to choose from, easily outnumbering the 769 variable and trackers by almost three to one. Two-year fixed is the area where the lowest rates reside, and the cheapest available comes from West Brom Building Society at 1.58%."

Key decisions about fixing your mortgage the same as they were 25 years ago

While the cost and choice of fixed rate deals has changed beyond recognition, the major decision facing borrowers has remained the same over the last 25 years: when to fix and for how long.

Keith Osborne, editor of, says: "Deciding when to fix your mortgage has always been a very personal decision. Trying to ‘beat' the market has always been tough and so it's always better to fix based on what you can afford to pay and whether you'd be in financial trouble were interest rates to rise."

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