If you have been renting for a long time and feel hesitant towards home buying, the time to spring into action could be now. Of course, high property prices across U.K might still sting you financially, but lenders are trying their best to make mortgages very affordable for buyers. In fact, mortgage rates are their lowest since records began in 1995.

Low Interest Rates:

The figures released by Bank of England recently show that mortgage rates for 2-5-year deals have fallen to their lowest in the last 23 years.

If you are interested in getting your foot on the property ladder and ready to offer just 5% as down payment, you can obtain a very low interest rate of only 3.3% on a 2-year mortgage. This rate stood at 4.02% only a year ago. Similarly, interest rate on 5-year mortgage has come down from 4.71% to just 3.89%.

Whether this decrease in mortgage rates is because of an uncertainty over Brexit or because of the stiff competition among lenders is not clear. But one thing is clear and that is a big boost in the numbers of people opting in favor of homeownership. The share of first-time homebuyers in the total number of mortgage approvals today stands at 24.2%.

Competition among lenders:

According to Shaun Church who is a mortgage broker in a firm called Private Finance, the reason why mortgage rates are continuing to decline is fierce competitor among lenders. He says that low deposit mortgages where buyers pay a minimum deposit of 5%, are expensive and there is still scope for lenders to further reduce mortgage rates. He adds that it is possible for first time home buyers to find even lower mortgage rates if they can put forward a 10% down payment to their lender. Can you imagine a 2.24% interest rate on a two-year mortgage if you are willing to pay 10% deposit on the purchase of your home?

Church feels that the cost of mortgages is still too high, especially where 95% of the value is financed by lenders. One shouldn’t be surprised if interest rates for these two-year fixed mortgages fall further and come below 3% because of the fierce competition among the lenders.

If you have remained undecided until now, it could be time for you to spring into action and become a homeowner and take advantage of these low mortgage rates.