A decline in fixed mortgage rates has been observed, providing a welcome respite for borrowers after what’s been a tumultuous year. Moneyfacts’ recent data indicates that for the second consecutive month, average rates for both two-year and five-year fixed terms have decreased, landing at 6.47% and 5.97% respectively.
This sees the two-year fixed rate standing at a rate “0.5% higher than the average five-year equivalent,” a slight decrease from “0.51% last month.”
Rachel Springall, finance expert at Moneyfactscompare.co.uk, stated: “Fixed mortgage rates have fallen across the spectrum, signalling a positive change in the market. Overall, the average two and five-year fixed rates have now fallen for the second month running, so borrowers could find cheaper deals to choose from.”
She added, “These are encouraging signs for borrowers who may be looking for a new fixed rate deal, but they still may be on the fence about locking in, hoping rates will fall further in the weeks to come.” Furthermore, Springall noted that for those with fewer deposit resources, “the average five-year fixed rate at 90% loan-to-value has fallen to 5.81% – the lowest point since June 2023 (5.23%).”
In terms of available mortgage products, there’s been an uptick in options over the past quarter for those seeking 90% to 95% loan-to-value (LTV), enhancing the choices available to borrowers.
Octane Capital’s separate research echoed this sentiment, highlighting that the “average monthly repayment for those buying in September coming in £64 less per month compared to July of this year.” The study also detailed that the “average cost of a 75% loan-to-value five-year fixed rate dropped to 5.3% in September, down from 5.79% in July.”
Adding to the discourse, Nathan Emerson, CEO at Propertymark, commented, “Our member agents have reported continued strength in the market despite difficult financial hurdles for homebuyers. A drop in house price growth has enabled buyers to negotiate on the final sale price and in turn, combat rising interest rates.” Emerson also expressed his optimism, stating, “We hope to see inflation continue to steady and for further drops in interest rates and in turn, mortgage payments to get buyers back to more sustainable levels.”