Why 2016 has been a great year for mortgage rates
New research has revealed that borrowers have been the beneficiaries of strong competition in the mortgage industry in 2016.
Data from a leading analyst has revealed that the average rates offered by the major lenders have fallen significantly in 2016, with a range of record-breaking deals becoming available this year.
Research from a leading analyst has revealed that the UK's biggest lenders have 'upped their game' in recent months, reducing mortgage rates across the board.
The Moneyfacts UK Mortgage Trends report reveals that lenders have considerably reduced the average rate on their products in 2016 as they go toe-to-toe with rivals in a highly competitive market.
Moneyfacts looked at the average 'true' rate (combining the product fee with the initial interest rate to produce a single percentage figure) of the major lenders across 2016. It shows that the cost of deals has reduced markedly at both 75% and 95% loan-to-value (LTV).
For example, the average 'true' rate on a 75%LTV two-year fixed rate with Barclays fell from 2.2% in January 2016 to 1.78% in December. The same average rate fell by 0.45% at the Nationwide, 0.42% at TSB, 0.43% at Santander and 0.42% at HSBC.
The same results were found at 90% LTV. TSB's average 'true' five-year fixed rate fell from 3.35% in January to just 2.78% in December - a drop of 0.57%. Rates with all the major lenders fell across 2016, with the cost of the average Yorkshire Building Society five-year fix falling by 0.45% to 2.56%.
Charlotte Nelson from Moneyfacts says: "2016 saw competition in the mortgage market ramp up, with some of the biggest lenders seeing a cut to their average true rate of as much as 0.62%. With the average two-year fixed true rate at 75% LTV standing at 2.25% in December, all but one of the main lenders in the top 10 are better than average, meaning borrowers are significantly better off today than at the start of the year.
"These providers, who represent 80% of the market share, are not just relying on their popularity. Instead, they are leading the charge with rate cuts and intense competition, leaving the rest of the market with the choice of either following suit or being left in the dust.
"This year has been filled with economic uncertainties, from whether the base rate was going to go up or down, to the EU referendum. Throughout, the competitiveness of the mortgage market has remained, with all average rates falling consistently to record lows."