There have been several signs that the UK housing market is beginning to rebound, with figures suggesting that mortgage rates are coming down generally. At the same time, major high-street lenders have started offering mortgage rate cuts for buyers with small deposits.
According to figures from Moneyfacts, averaged fixed-term mortgage rates have fallen at the same time product ‘shelf-life’ has increased to 21 days – up from 17 days in August 2024 and as little as 15 days during September 2023.
The report suggests that average two-year fixed mortgages have decreased by 0.21% to 5.56%, while average five-year fixed mortgage rates have dropped 0.18% to 5.2%.
Although the average rate of a two-year fixed mortgage rate is 0.36% higher than its five-year equivalent, the current average is the lowest since February 2024. Average rates for five-year fixed mortgages are at their lowest level since March 2024.
There are currently slightly fewer mortgage products on the market, with the number of available mortgages falling from 6,657 options in August to 6,253 in September. However, the average rates for products other than fixed-term mortgages have also fallen.
The average two-year tracker mortgage rate has slightly increased from 5.59% in August 2024 to 5.68% in September 2024. Despite this month-to-month increase, the rate remains significantly lower compared to the same period last year when it was 6.25%.
Average standard variable rates (SVR) have also fallen slightly, with the average SVR rate for September 2024 coming in at 7.99% – a drop from 8.16% in August 2023 and 8.09% in September 2023.
Rachel Springall, finance expert at Moneyfacts noted that the drop of average fixed-rate mortgage rates across the spectrum was ‘welcome news for prospective borrowers, noting rates were “back down to levels not seen for over six months” and it can “take a few weeks for lenders to react to a volatile swap rate market, so it’s good to see mortgage pricing moving in a positive direction”.
Some of the market’s largest lenders have also recently announced cuts to fixed mortgage rates for buyers with smaller deposits.
Nationwide Building Society, NatWest and TSB have all introduced lower rates for smaller loans with low deposits – including high loan-to-value (LTV) home loans.
Commenting on its recent rate changes, Henry Jordan, director of home at Nationwide Building Society, said: “These latest reductions will ensure that we have some of the most competitive rates on the market with a particular focus on supporting first-time buyers in what remains a challenging environment.”
The bank has recently reduced its rates by up to 0.25% across its two-year, as well as its five-year fixed products for those buying homes with deposits of between 5% and 25% of the property’s sale price.
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The figures in this post are correct as of the time of publication. This article is not advice. Contact a professional mortgage advisor for personal mortgage advice applicable to your circumstances.
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