Average mortgage rates have slipped back below 5 per cent after a recent rise, figures show.
According to data from Moneyfactscompare.co.uk, which tracks the mortgage market, the average rate stood at 4.99 per cent on Monday.
It’s not the first time in recent weeks rates have dipped under this key threshold – they also reached 4.99 per cent on 3 September before subsequently climbing.
Before that, borrowers had not seen sub-5 per cent averages since September 2022. That year, rates surged following the Liz Truss government’s mini-Budget, climbing past 5 per cent just a week later and peaking above 6 per cent by October.
Rachel Springall, finance expert at Moneyfactscompare.co.uk, said many borrowers – especially the millions coming to the end of cheap fixed deals this year – will be “no doubt thrilled” by the drop.
However, she cautioned that it “remains uncertain” how long these lower rates will last.
Here, we look at what’s behind the recent movements in mortgage rates – why they fell, rose, and have now fallen again – and the best deals currently on the market.
Why rates keep moving
Daily movement in the average mortgage rate can be caused by changes in swap rates, new products launching, or deals being withdrawn, Ms Springall said.
She explained that rates tend to rise when swap rates – the interest lenders pay institutions in return for fixed funding – climb.
“Conversely, the recent drop in swap rates has helped push fixed rates lower,” she added.
square SAVING AND BANKING How I Manage My Money: IT worker on £2k a month, with £5k in pensions
Read More
Springall said swap rates have fallen recently as markets anticipate slower economic growth, moderating inflation, and potential future Bank of England (BoE) rate cuts.
She noted that “mortgage rates can rise and fall quickly if there is a change in direction of swap rates, which we have seen over the past few months,” adding that borrowers are now benefiting from cheaper deals.
What’s next for borrowers
For those looking to secure a new mortgage deal, Springall said the current environment offers opportunities but also uncertainty.
She pointed out that borrowers will find cheaper rates now, particularly as many are due to come off a fixed-rate deal before the end of the year.
Fixed rates do not always move in line with the BoE’s base rate, which is currently sitting at 4 per cent, but are closely linked to swap rates.
She added that market reactions to upcoming events, including the Budget and the BoE’s rate decision this Thursday, could have a direct impact on mortgage pricing.
“However, sticky inflation makes it less likely for the BoE’s Monetary Policy Committee to unanimously agree on making more cuts. In addition, uncertainty remains surrounding what may be revealed within the Budget.
“Borrowers keen to refinance would be wise to seek advice to secure a new deal and not wait around for more rate cuts by the BoE.”
Best deals now
For borrowers looking to lock in a new deal, these are the best rates available. The top set of deals are only available to new buyers, and at low loan-to-value (LTV).
The LTV represents the proportion of the property value you are borrowing on – with the remainder being paid upfront as a deposit.
Below are some of the other best deals available.
Your next read
square PROPERTY AND MORTGAGES ExplainedBank of England set to hold interest rates at 4% – what it means for you
square PENSIONS AND RETIREMENT Money ClinicI’m 65 and on universal credit. Will I stop getting it when I reach state pension age?
square SAVING AND BANKINGHow I Manage My Money: IT worker on £2k a month, with £5k in pensions
square LIFESTYLEMansion tax could force cash-poor pensioners to use equity release
Hence then, the article about average mortgage rate drops back below 5 here are the best deals was published today ( ) and is available on inews ( Middle East ) The editorial team at PressBee has edited and verified it, and it may have been modified, fully republished, or quoted. You can read and follow the updates of this news or article from its original source.
Read More Details
Finally We wish PressBee provided you with enough information of ( Average mortgage rate drops back below 5% – here are the best deals )
Also on site :