Home > News > Average UK five-year mortgage rate less than 6% for first time

Average UK five-year mortgage rate less than 6% for first time

The average rate on a five-year mortgage deal has dropped below 6% for the first time since the disastrous mini-budget two months ago that ended up costing Kwasi Kwarteng his job as chancellor.

Moneyfacts, a financial data provider, said that the average five-year fixed mortgage rate had dropped below 6% for the first time in seven weeks. It suggested that the reduction is good news for would-be borrowers, but rates could “fall further still”.

The housing market was thrown into disarray by Kwarteng’s radical plan for unfunded tax cuts, which triggered a spike in the long-term borrowing costs that underpin mortgage deals. His decisions have been largely reversed by his successor Jeremy Hunt in an attempt to calm the financial markets.

“Borrowers may well breathe a sigh of relief to see that fixed mortgage rates are starting to fall, but there may be much more room for improvement,” said Rachel Springall, a finance expert at Moneyfacts. “Borrowers who paused their homeownership plans or parked the idea of refinancing may now be tempted to scrutinise the latest deals on offer.”

Home loans were already getting dearer after this year’s Bank of England interest rate increase. But about 1,700 deals were withdrawn amid the financial shock caused by the mini-budget, and the average two- and five-year fixed mortgage rates rose sharply, from 4.74% and 4.75%, respectively, to peak at 6.65% and 6.51% on 20 October. The number of deals has increased from a low of 2,258 to 3,540 now. On the eve of the Kwarteng budget, there were 3,961 products.

“It is worth noting that rates could fall further still, but there is no clear answer as to how quickly that may be,” Springall added. “Indeed, it’s been about two months since both the average two- and five-year fixed mortgage rate breached 5%, but today only a handful of lenders are offering sub-5% fixed deals.

“Borrowers may feel they have to be patient for a little while longer before committing to a new fixed mortgage or even wait until next year to see how the market recovers from the recent interest rate uncertainty.”

HICH LTD has continually raised the quality standards in the UK property survey market. Our multi-award-winning property survey service has made us the leading reference in the property survey market.

We offer property survey services of the highest quality. Using state-of-the-art equipment, we provide top-notch property surveys at affordable prices. Our prices are based on the number of rooms rather than the value of the properties, so you will always get the best value for money with our services.

Please look at our Trustpilot page and see why customers have chosen us as their favourite property survey provider!

At HICH LTD, we work to serve our clients and make the world a better place for everyone. We actively collaborate with NGOs to promote environmental, social and charitable causes. If you want to know more about our efforts or how you can help, contact us at hichinfo@aol.co.uk.

HICH LTD extends a warm invitation to contractors and service providers throughout the UK to join our network; by joining the Contractors and Service Providers Network, you will enjoy benefits such as a significant increase in customer flow, advertising on our high-traffic website, and direct contact with thousands of customers in your zip area. Find more information here or by following the QR code in the following video.