Five-year fixed rate mortgages fall below 6% for first time since July
The average rate for five-year fixed rate mortgages has dropped to below the 6% mark, a major financial information service has found.
Data compiled by Moneyfacts showed that the average five-year fixed residential mortgage rate is now 5.98%. This is down from an average rate of 6.03% on Wednesday.
It’s also the first time that five-year mortgage rate has fallen below the six per cent threshold in almost three months.
After the Bank of England left interest rates unchanged at 5.25% last week, many mortgage lenders have been reducing their rates.
Confidence booster for mortgage market
Myron Jobson, the senior personal finance analyst for interactive investor, said: “Average mortgage rates continue to pare back from lofty heights seen in July following sizeable falls in inflation, which could mean that interest rates might not peak as high as feared.
“This is a confidence booster for those looking to take out a mortgage soon. The latest fall in rates is another sign that the mortgage crisis which has stopped many from participating in the property market this year is turning a corner.
“The metrics used to price fixed-rate deals give lenders the green light to lower the cost of fixed-rate mortgages in anticipation of a future where borrowing costs will be reduced.
“The burning question is, how low will mortgage rates go and how fast will they fall?”
Jodi Spreadbury, senior mortgage and protection adviser at The Mortgage Broker, commented: “Rates have been a constant worry for customers all year. Exceeding 6% seemed to really panic people, so seeing reductions across the board is inspiring a bit of confidence in the market.
“I think customers are slowly realising that one per cent and two per cent rates will not be coming back as quick as they initially thought, but seeing a rate start with a five instead of a six definitely makes everyone happier.”
Meanwhile, Matt Smith of property website Rightmove, said that he anticipated interest rate stability in the final quarter of the year, with rates eventually dropping further, resulting in more lenders offering deals below 5%.