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Brokers predict surge in sub-2.5% five-year fixes

Brokers say the number of sub-2.5 per cent five-year fixed rate products is set to soar as funding costs continue to fall.

Falling swap rates has led to the number of sub-3 per cent five-year fixed rates increasing four-fold over the past 12 months. In the past year, five-year swaps have fallen from 2.03 per cent to 1.25 per cent as at 27 January.

This has led to the number of sub-3 per cent five-year fixes rising from 55 a year ago (out of a total of 706 products) to 217 now (out of a total of 979 five-year deals), according to

More generally, the average five-year fixed rate has fallen 18 basis points to 3.74 per cent over the past year – a record low.

Trinity Financial product and communications manager Aaron Strutt says: “We’ve seen rates across all terms come tumbling down in recent months and it doesn’t look like abating at the moment. Demand for five-year fixed rates is on the increase and lenders are responding with more products and better rates.

“Whereas the benchmark has been ‘can we get a five-year fixed rate out below 3 per cent’, I think we’re starting to see that shift towards the 2.5 per cent mark and a year from now I think we’ll see similar increases in the number of sub-2.5 per cent five-year fixes in the market.”

Middleton Finance managing director Daniel Bailey agrees, saying: “With the way rates are going at the moment and the competition we are seeing from lenders, it’s not difficult to imagine a similar jump in the number of products at 2.5 per cent or less a year from now.”

Separately, Accord Mortgages today launched four new five-year fixed rates, all of which are under 3 per cent.

For borrowers with a 25 per cent deposit, borrowers have the option of a 2.69 per cent product and a 2.79 per cent product, which have fees of £845 and £345 respectively. For borrowers with a 35 per cent deposit, borrowers have the option of a 2.59 per cent product and a 2.69 per cent product, which have fees of £845 and £345 respectively.


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