The average new five-year fixed mortgage rate has fallen back below 6% for the first time since early July, according to the sector’s leading data provider.
Across all deposit sizes, the typical five-year fixed residential mortgage rate on sale is now priced at 5.99%, Moneyfacts said, down from 6.03% on Wednesday.
However, big mortgage lenders have been continuing to cut rates even lower after the Bank of England left the base rate unchanged at 5.25% on Thursday last week. There are a growing number of “best-buy” five-year fixed-rate deals now available at below 5% – though in many cases these are restricted to buyers able to put up a large deposit, or come with large fees.
The last time the average five-year fixed deal was below 6% was on 3 July, when it stood at 5.97%, according to Moneyfacts. As recently as 19 July, the typical five-year rate was 6.33%.
The average two-year fixed residential mortgage rate, meanwhile, is 6.50% – down from 6.53% on Wednesday. On 19 July it stood at 6.81%.
Fixed-rate mortgage pricing has been on a rollercoaster ride during the past 12 months or so: they shot up after Kwasi Kwarteng’s disastrous mini-budget last year unleashed chaos in the financial markets, then gradually fell back as markets stabilised. They were then spooked once again by a smaller than expected drop in the UK inflation rate at the end of May, but have since begun falling once more.
Simon Gammon, a managing partner at the broker Knight Frank Finance, said lenders had continued to cut mortgage rates in the wake of better inflation figures and the Bank of England’s decision to hold the base rate after 14 consecutive increases, “which will do a lot to improve sentiment in the property market”.
He added: “We do expect more, marginal cuts during the weeks ahead, but that will soon reach a plateau. The best fixed-rate deals already start with a four, and we expect rates to settle in that range until the Bank of England opts to cut the base rate, which is unlikely before next spring at the very earliest.”
Source : The Guardian