Five-year fixed-rate mortgage deals have fallen below six percent for the first time in seven weeks, according to statistics published by Moneyfacts.
Moreover, the financial information company suggested that rates “could fall further still”, which is definitely a boon for prospective borrowers. The latest fall in the average interest rate also suggests that the mortgage market is stabilising somewhat following Kwasi Kwarteng’s inglorious tenure as chancellor.
Indeed, the former chancellor’s controversial policies included unfunded tax cuts, which sent long-term borrowing costs spiralling upwards. Now, borrowers will undoubtedly be relieved to hear that after several turbulent, gloomy-looking weeks, mortgage rates are starting to fall back down to earth.
“Borrowers may well breathe a sigh of relief to see that fixed mortgage rates are starting to fall,” says Rachel Springall, in-house finance expert at Moneyfacts. “Borrowers who paused their homeownership plans, or indeed parked the idea of refinancing, may now be tempted to scrutinise the latest deals on offer.”
Naturally, things could be better, according to Springall.
“But there may be much more room for improvement…It is worth noting that rates could fall further, still, but there is no clear answer, as to how quickly that may be. Indeed, it has been about two months, since both the average two-year and five-year fixed mortgage rate breached five percent; but today, only a handful of lenders are offering sub-five-percent fixed deals.”
However, the overall signs are promising, to a certain degree, representing a welcome respite from the positively apocalyptic predictions of the OBR (Office of Budget Responsibility).
The OBR had anticipated interest rates to peak at five percent by the end of 2024. On the other hand, Pantheon Macroeconomics has condemned this figure as ‘implausibly high’. “We think it has overestimated the size of the hit, from mortgage refinancing, next year,” a spokesperson for Pantheon Macroeconomics said.
Ultimately, we are also left with these parting words of advice from Moneyfacts:
“Borrowers may feel they have to be patient for a little while longer yet before they commit to a new fixed mortgage, or even wait until next year to see how the market recovers from the recent interest rate uncertainty.”