The average five-year fixed mortgage rate falls below 6% for the first time since September

Interest on the average five-year fixed mortgage fell below 6% to 5.95% for the first time in seven weeks as more lenders cut rates.

Two-year fixed rate transactions now average 6.13%, according to Moneyfacts.

These are down from 6.32% for a five-year fix and 6.47% for a two-year fix on November 1.

The lower five-year average will save borrowers £43 on their monthly payments for a £200,000 mortgage, compared to those who fixed at the start of the month. For a fixed two-year contract, the saving is £42.

Mortgage rates soared following then-Chancellor Kwasi Kwarteng’s ill-fated mini-budget. Borrowing costs in the UK jumped as investors sold their UK government bonds – known as gilts – before the Bank of England stepped in by announcing a bond-buying program of £65 billion to shore up the market.

The average two-year fixed rate rose from 4.74% on September 23 (Budget Day) to 5.17% a week later on September 30.

On October 20, the two-year and five-year patches reached highs of 6.65% and 6.61% respectively.

The last time the average two-year fixed rate mortgage was 6.65% or higher was in August 2008, at 6.94%. The last time the average five-year fixed rate mortgage was 6.51% or higher was in September 2008, at 6.52%.

However, there is good news as rates are slowly starting to come down. Last week, the average two-year fixed-rate transaction cost across all LTV brackets fell every day, according to Moneyfacts.

Rachel Springall, finance expert at Moneyfacts.co.uk, said: “Borrowers may well breathe a sigh of relief as fixed mortgage rates start to fall, but there may be a lot more room for that. ‘improvement.”

“As the average five-year fixed mortgage rate falls below 6% for the first time in seven weeks, borrowers who have put their homeownership plans on hold, or who have in fact given up on the idea of refinancing, may now be tempted to review the latest offers. .

“However, it should be noted that rates could fall further, but there is no clear answer as to how quickly this could be. Today, only a handful of lenders offer fixed offers below 5%. Borrowers may feel like they have to wait a little longer before committing to a new fixed rate mortgage, or even wait until next year to see how the market recovers from the recent interest rate uncertainty.

This week, Santander announced that it was cutting all of its residential mortgage rates by up to 0.45%. All residential trailing rates have also been reduced by up to 1.25%, the lender said in a note to brokers.

Additionally, Nationwide is slashing rates for its two-, three-, and five-year fixed agreements by up to 0.3%. For new customers who move, the lender’s two-year fixed rate of 75% will drop by 0.25% to 5.39%, with a fee of £999.

And for first-time buyers, a five-year fixed rate at 90% LTV will reduce by 0.15% to 5.29%, with a fee of £999. Its 85% two-year LTV tracking rate also fell, down 0.3% to 3.94%, with a fee of £999.

Natalie Hines, founder of Sutton Coldfield-based broker Premier One Mortgages, said: ‘We are already starting to see five- and two-year fixed rates come down and I’m sure we’ll see other lenders follow suit over the next few months. weeks. .

“I think we can expect to see further increases in the base rate, but it will eventually stabilize between 3% and 4%.

“With swap rates now stabilizing, the average fixed rate 18 months from now is unlikely to be any different from where we are now.”