Best-buys drop by 0.5% in six weeks, says mform.co.uk

Best buy rates have fallen by nearly 0.5% on average over the past six weeks, says mform.co.uk.

The finance website says that in some cases rates have been slashed by as much as 1.16% saving around £2,230 a year on a £200,000 loan.

Mform.co.uk says the reduction of 0.5% saves £1,000 a year.

The online mortgage company analysed rates for the most competitive mortgage across 14 categories covering two, three and five-year fixed, discounted and tracker mortgages plus 10 and 25-year fixed rates, lifetime trackers and five-year fixed offsets and lifetime variable offsets.

Rates have been cut in eight out of the 14 categories and fees have even been reduced in five of the categories although they have been increased in another two categories.

On average, rates have been cut by 0.485% with the biggest reduction coming in two-year fixed rates where the best buy is now 1.16% lower than at the start of August.

Eamonn Rice, chief executive of mform.co.uk, says: “Rates are definitely moving in the right direction for homeowners but lenders are still much more selective when deciding who to lend to, and in particular who they will offer their best buy deals to.

“Indeed, many now require much larger deposits and we estimate that home buyers now need a deposit of £37,119 to qualify for the most competitive mortgage deals. Our research shows that the average deposit necessary has soared by 43 per cent from last year when it was £20,980.”

Rates for the best buy deals are unchanged in six of the 14 categories.

The eight which have seen cuts are two, three, five and 10-year fixed rates, five-year discounts, two and five-year trackers and five-year fixed offsets.