Average five-year fixed mortgage rate falls below 6% for the first time since September
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Average five-year fixed-term mortgage rates fall below 6% for the first time in nearly two months as lenders cut rates from October peak
- The average fixed interest rate over five years is now 5.95%, compared to 6.32% on 1 November
- The fixed average over two years is 6.13%, compared to 6.47% at the beginning of the month
- Lenders, including Santander, have been slowly cutting mortgage rates
- In October, the five-year fixed rate peaked at 6.61%, the highest since September 2008 when it reached 6.62%
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Rates on the average five-year fixed-term mortgage have fallen below 6 percent to 5.95 percent for the first time in seven weeks, as more lenders lower their rates.
Two-year fixed-rate deals now average 6.13 percent, according to Moneyfacts.
These are down from 6.32 percent for a five-year fix and 6.47 percent for a two-year fix on November 1.
The drop in the five-year average will save borrowers £43 on their monthly payments on a £200,000 mortgage, compared to those who took out a loan at the beginning of the month. For a two-year fixed deal, the saving is £42.
Gradual decline: Average five-year fixed-rate mortgage rates fall below 6% for the first time in seven weeks
Mortgage rates skyrocketed in the wake of then-chancellor Kwasi Kwarteng’s ill-fated mini-budget. UK borrowing costs rose as investors sold their UK government bonds – known as gilts – before the Bank of England announced a £65bn bond buying program to bolster the market.
The two-year average fixed rate rose from 4.74 percent on September 23 (the day of the budget) to 5.17 percent a week later, on September 30.
On Oct. 20, the two-year and five-year fixes hit peaks of 6.65 percent and 6.61 percent, respectively.
The last time the average two-year fixed-rate mortgage was 6.65 percent or more was in August 2008 at 6.94 percent. The last time the average five-year fixed-rate mortgage was 6.51 percent or more was in September 2008 at 6.52 percent.
However, there is also good news as rates are slowly starting to fall. Last week, according to Moneyfacts, the average cost of two-year fixed-rate agreements across all loan-to-value brackets fell every day.
Rachel Springall, financial expert at Moneyfacts.co.uk, said: ‘Borrowers can breathe a sigh of relief as they see fixed mortgage rates starting to fall, but there may still be a lot of room for improvement.
“With the average five-year fixed mortgage rate falling below 6 percent for the first time in seven weeks, borrowers who have put their homeownership plans on hold or even parked the idea of refinancing may now be tempted to scrutinize the latest offerings. .
However, it’s worth noting that rates could fall even further, but there’s no clear answer on how soon that will be. Today, only a handful of lenders offer sub-5 percent fixed deals. Borrowers may feel they need to be patient before taking out another fixed mortgage, or even wait until next year to see how the market recovers from the recent interest rate uncertainty.”
Mortgage rates have started to fall after a sharp rise last month following the mini-budget
This week Santander announced it would cut all its residential mortgage rates by up to 0.45 percent. All residential tracker rates have also been reduced by up to 1.25 percent, the lender said in a note to brokers.
Natalie Hines, founder of Sutton Coldfield-based brokerage Premier One Mortgages, said: ‘We’re already starting to see five- and two-year fixed rates fall and I’m sure we’ll see other lenders follow in the coming weeks. .
“I think we can expect further increases in base rates, but eventually it will be somewhere between 3 and 4 percent.
“With swap rates stabilizing, the average fixed rate over 18 months probably won’t be much different from where we are today.”