The Rightmove mortgage tracker showed that at 60 and 75 per cent loan to value (LTV), there were five-year fixed rates as low as 4.94 per cent.
Average mortgage rates have been steadily declining in recent weeks to coincide with the less uncertain landscape.
As of 22 September, the lowest available rate for a two-year fix at 60 per cent LTV was 5.44 per cent, and the lowest for a mortgage at 75 per cent LTV was 5.52 per cent.
At 85 per cent LTV, the lowest two-year fixed rate was 5.84 per cent and for a five-year fix, this was 5.18 per cent.
The lowest available two-year fixed rate at 90 per cent LTV was 5.93 per cent as of today, while the lowest five-year fixed rate was 5.38 per cent. At 95 per cent LTV, this was 6.24 per cent and 5.69 per cent respectively.
Falling swap rates to cause lower mortgage pricing
Since the Bank of England’s decision to maintain the base rate at 5.25 per cent yesterday which was another indication of the stable environment, swap rates dropped further and brokers speculated that mortgage pricing would soon follow.
The two-year swap rate dropped below five per cent to 4.998 per cent down from 5.045 per cent two days ago. The five-year swap rate fell 4.396 per cent on 20 September to 4.387 per cent currently.
Peter Stamford, director and lead adviser at Moor Mortgages, said: “It looks like the swap market is reacting to yesterday’s base rate decision. This is a really positive signal for homeowners, as it will allow banks to reduce rates and ease the pain of movers and remortgagers alike. I have everything crossed that this could reignite the stagnant property market.
“Here’s to more good news as we finish up 2023.”
Andrew Montlake, managing director at Coreco, said two-year swaps falling below five per cent was a “watershed moment” and added: “This should give lenders plenty of room for manoeuvre when it comes to product pricing.
“I suspect this will be the catalyst for a new set of cheaper products that stimulate both the purchase and remortgage market alike.”
Lewis Shaw, owner and mortgage expert at Shaw Financial Services, said the base rate pause and lower than expected inflation resulted in a decline in gilt yield and swap rates.
He added: “Given that swap rates are one of the main tools for lenders pricing fixed rate mortgages, it’s nailed on we’ll start to see two-year fixed-rate mortgages reducing over the next few weeks if the economic status quo is maintained. It’ll be some time before two-year fixes drop below five per cent. However, it’s the best metric we have that more rate reductions are on their way and not a moment too soon.”
Darryl Dhoffer, mortgage expert at The Mortgage Expert, said this was the “best news” in months.
He added: “Surely it is a matter of days before lenders react and launch more competitive two-year fixed rate deals. Dare I say it, in the coming weeks the big six lenders could come out with two-year deals beginning with a four. As Delia Smith once said, ‘Let’s be having you’.”
