Mortgage rates in the UK have fallen to their lowest level since the start of 2023. This amendment is a big deal to both the current and future homeowners, as well as home buyers. In mid- or late-August, the average two-year mortgage rate dropped below 5%. This was the first such increase in borrowing costs since former Prime Minister Liz Truss’s disastrous mini-budget in September 2022. Some 400,000 borrowers are expected to remortgage this year, making this change particularly timely.
On Thursday, the average five-year fixed-rate mortgage fell to 4.99%, down from 5% one day earlier. This marks the first time since May 3, 2023, that the average five-year fixed-rate mortgage has fallen below the 5% threshold. The average two-year fixed-rate mortgage dropped to 4.97%. This decrease came from the day before’s rate of 4.98%.
Commenting on the improvements, Adam French, head of news at Moneyfactscompare.co.uk said it is good news for borrowers that these changes are taking place. He stated, “This will be more welcome news for borrowers,” highlighting the significance of the declining rates in an environment where many are seeking financial relief.
Now that mortgage rates have recently taken a slight step back, mortgage applications experienced a corresponding increase. This decrease is the effect of a gradual and consistent drop in interest rates over the last […]French detailed how this trend has provided a modest boost to affordability for the majority of homeowners and homebuyers. This shift has occurred due in part to strong average earnings growth. He cautioned that “a few modest mortgage rate reductions are the best borrowers can probably hope for in the short term as lenders adjust to the prospect of higher rates for longer.”
Although this is a powerful, promising change in direction on mortgage rates, they’re still high by comparison to before the brevity of the mini-budget. Those events last year led to an immediate and stark increase in the cost of UK government borrowing. This increase had a direct effect on mortgage rates across the entire market.
There is a diverse credit capital market today, providing borrowers with deep pools of capital. This means that there are now 7,031 all residential mortgage products to choose from, up from 6,992 just the working day before. This expansion means more choices of products for borrowers. It provides more options for people who want to remortgage in a new, fair and affordable economy.
