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Lowest mortgage rates below 5% for first time since June

Nick Cheek
Written By:
Nick Cheek

The lowest available mortgage rate has fallen below five per cent for the first time in three months, data from a property portal has shown.

The Rightmove mortgage tracker showed that at 60 and 75% loan to value (LTV), there were five-year fixed rates as low as 4.94%. 

Average mortgage rates have been steadily declining in recent weeks to coincide with the less uncertain landscape. 

As of 22 September, the lowest available rate for a two-year fix at 60% LTV was 5.44%, and the lowest for a mortgage at 75% LTV was 5.52%. 

At 85% LTV, the lowest two-year fixed rate was 5.84% and for a five-year fix, this was 5.18%. 

The lowest available two-year fixed rate at 90% LTV was 5.93% as of today, while the lowest five-year fixed rate was 5.38%. At 95% LTV, this was 6.2% and 5.69% respectively. 

Falling swap rates to cause lower mortgage pricing 

Since the Bank of England’s decision to maintain the base rate at 5.25% yesterday which was another indication of the stable environment, swap rates dropped further and brokers speculated that mortgage pricing would soon follow. 

The two-year swap rate dropped below 5% to 4.998% down from 5.045% two days ago. The five-year swap rate fell 4.396% on 20 September to 4.387% currently. 

Peter Stamford, director and lead adviser at Moor Mortgages, said: “It looks like the swap market is reacting to yesterday’s base rate decision. This is a really positive signal for homeowners, as it will allow banks to reduce rates and ease the pain of movers and remortgagers alike. I have everything crossed that this could reignite the stagnant property market.  

“Here’s to more good news as we finish up 2023.” 

Andrew Montlake, managing director at Coreco, said two-year swaps falling below 5% was a “watershed moment” and added: “This should give lenders plenty of room for manoeuvre when it comes to product pricing.  

“I suspect this will be the catalyst for a new set of cheaper products that stimulate both the purchase and remortgage market alike.” 

Darryl Dhoffer, mortgage expert at The Mortgage Expert, said this was the “best news” in months. 

He added: “Surely it is a matter of days before lenders react and launch more competitive two-year fixed rate deals. Dare I say it, in the coming weeks the big six lenders could come out with two-year deals beginning with a four. As Delia Smith once said, ‘Let’s be having you’.”