The average rate for a five-year fixed mortgage in the UK has fallen below 5% for the first time since May 2023, now standing at 4.99% as of Thursday, according to financial services firm Moneyfacts. The reduction from 5% the previous day may represent a minor financial saving, but it is viewed by Moneyfacts as a potential indication of shifting market sentiment.
This decrease in rates could enhance buyer confidence and may lead to increased competition among lenders. In a related trend, the average two-year fixed-rate mortgage also dropped below 5% last week and further declined to 4.97% on Thursday from 4.98% the day before.
Adam French, head of news at Moneyfacts, noted that the latest data reflects intensified competition among lenders and suggests an improvement in borrowing conditions. However, he cautioned that the current inflation rate of 3.8% may hinder the likelihood of base rate cuts in 2025, implying that modest mortgage rate reductions may be the most borrowers can expect in the near future.
Peter Stimson, director of mortgages at MPowered, remarked that while the average rate decline is encouraging for homebuyers and those looking to remortgage, it is essential to recognize that individuals with significant deposits or equity could secure rates below 4%.
Furthermore, the availability of mortgage products has increased, with a current offering of 7,031 residential options, up from 6,992 the previous day. In total, approximately 900,000 fixed-rate deals are scheduled to expire in the latter half of 2025. It is important to note that mortgage rates remain higher than they were prior to the September 2022 mini-budget, which significantly elevated the cost of UK government borrowing and influenced mortgage rates, reaching peaks not seen since the 2008 financial crisis by July 2023.
Source: https://www.bbc.com/news/articles/cdd3qm7ly8ro?at_medium=RSS&at_campaign=rss