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Mortgage rates heading down with more cuts on the way

Nick Cheek
Written By:
Nick Cheek

Rising confidence among lenders and a priced in March base rate rise could lead to further mortgage rate falls in the coming days, a property analyst suggests.

Rightmove’s mortgage expert, Matt Smith, said: “Mortgage lenders had already factored in a bank rate rise in March. The fact that it was lower single hike than the previous rise in February, along with the longer-term indication that inflation is still likely to fall sharply over the year, is giving lenders more confidence to start to edge down their rates.

“We’ve seen reductions of up to 0.05% in average mortgage rates compared to this time last week, as lenders begin to respond to the Bank of England’s decision. Prices have reduced across all loan to value (LTV) ranges, for both two- and five-year fixed deals,” he said.

The average five-year fix at 85% loan to value (LTV) nudged down to 4.62% this week, from 4.65% a week ago, but still a massive jump from 2.54% a year ago. With a larger deposit, or 60% LTV, the average five-year fix is 4.28%, down from 4.30%, but again, a hike from 2.19% the previous year.

Two-year fixed rates higher than five-year deals

Two-year fixes remain more expensive than the five-year equivalent across all LTV bands, with the average two-year fix at 85% LTV at 4.99%, against 2.4% a year ago. All products cited are offered with a £999 fee.

Lenders have been repricing quickly but the property firm said it expects to see more product rate cuts this week.

According to last week’s Moneyfacts UK Mortgage Trends Treasury Report, the average rates for two- and five-year fixed mortgages have reached a six-month low after four months of consecutive declines.

There are currently 4,372 mortgages on the market, 466 fewer products than at the same time last year. However, options have markedly recovered since October 2022 just after the mini Budget, with only 2,258 mortgages available.

Numbers are also better than March 2021 with 3,532 mortgages available and mortgage options are slightly up on last month too with 4,341 products available.

High LTV mortgage choices have not recovered as quickly as low LTV counterparts, data showed.