Home owners offered 5 yr fixed rate mortgages below 4pc

Home owners are being offering five year fixed rate mortgages below 4 per cent – levels last seen before the credit crisis.

It comes amid growing expectations that the Bank of England will not raise interest rates until next year, much later than anticipated.

At the beginning of this year, interest rates were expected to rise from their current level of just 0.5 per cent in May. But this has been pushed back to earlier next year amid concerns about the fragile economy.

Yorkshire building society has announced a five year fixed rate mortgage at 3.99 per cent for those with a 25 per cent deposit.

Chelsea building society, owned by the Yorkshire, is also offering a five year fixed rate deal at 3.99 per cent, but it has a £1,995 arrangement fee.

Melanie Bien, of mortgage brokers Private Finance, said: “With interest rates looking increasingly unlikely to rise before next year, lenders are offering cut-price fixed rates to drum up business.

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“With five-year fixes now starting with a '3', pricing has breached an important psychological barrier which will make such deals attractive to borrowers looking for security.

“However, trackers remain cheaper still so those borrowers who do think it will be a while before interest rates start rising may be tempted to go for a variable option, which will be cheaper at least initially