Is now the time to get a fixed rate deal?

The best ever mortgages offered to borrowers with big deposits or substantial equity have gone.

The cream of the crop of five-year fixed rates were being offered last year at just below 2.5 per cent – now the best deals on offer sit nearer 3 per cent.

Two-year fixes remain nearer their record lows but borrowers will need to pay hefty fees and face the prospect of their deal running out just as base rate could be rising.

Things are continuing to look up for borrowers with smaller deposits though. The bigger margins on these mean lenders are still nibbling away at rates in the light of increased competition.

Rising house prices renewed bank and building society confidence and an economy on the up mean that competition for homeowner’s business across the mortgage market has finally taken hold.

In fact, borrowers may find it a better move to act now if they want a mortgage rather than delay, as imminent new rules to be introduced by the Mortgage Market Review may make it slightly harder and more expensive to get a loan for a while.

The rules will demand that almost all mortgage sales are advised – meaning that homeowners who opt to go direct rather than through a broker will need to speak to an lender’s in-house adviser potentially bumping up costs and the time it takes to secure a mortgage.

Official support for cheap mortgages has now been scaled back as the Treasury and Bank of England decided the Funding for Lending scheme would stop providing new cheap funding triggered by extra mortgage lending from January 2014.

The Bank’s scheme has driven mortgage rates to record lows – while decimating returns on savings.

But the sweetest spot for mortgage rates may have passed for the most credit worthy borrowers with the biggest deposits – but there are still great deals around.

By: Simon Lambert (This is Money.co.uk)