Comparison website uSwitch has said that lenders have started to “wise up” to what borrowers need.
It made the claims after a number of banks and building societies, including Barclays, Halifax and Nationwide, have announced rate cuts.
Personal finance expert at uSwitch Michael Ossei said that with many consumers struggling to pay off other dents and with many seeing little or no pay rise in recent years, it is hardly surprising there is a great deal of appetite for longer-term fixed rate deals.
“Although the Bank of England base rate has been stuck at an all-time-low of 0.5 per cent for almost three and a half years, consumers generally haven’t been getting a fair deal from lenders,” he said.
“It is only now that mortgages are starting to reflect this low rate, with the cheapest average interest rate on a fixed mortgage now around 3 per cent.
“Lenders are starting to wise up to what borrowers are looking for and are finally giving them what they want.”
However, Ossei added that there was still a downside to the current situation, with good value short-term deals falling.
In 2008, 53 per cent of all two year fixed deals had free valuations and legal fees – in 2012 this has fallen to 47 per cent, he explained.
Ossei added: “The other worry for borrowers is the larger deposits now required to benefit from the best rates. The better long-term fixed deals now require a 40 per cent deposit on average.
“Very few are available to buyers with smaller deposits and these tend to come with a trade-off, such as an increase in up-front fees.
“What we need to see is more lenders starting to compete on fees and deposits as well as rates, allowing those who want to budget and protect themselves from future rate rises to do so without being too heavily penalised.”
