Figures released by Rightmove have revealed that, when compared to the same period last year, residential mortgage rates have fallen across a wide variety of metrics. Given that a year ago, we were still in the aftermath of the disastrous mini Budget, this may not seem surprising but is still a good sign for hard-pressed borrowers and brokers alike.
The data from Rightmove shows that, compared to the same period a year ago, the average five-year fixed mortgage rate is now 5.38 per cent, down from 6.02 per cent; the average two-year fixed mortgage rate is now 5.84 per cent, down from 6.24 per cent; the average 85 per cent loan-to-value (LTV) five-year fixed mortgage rate is now 5.48 per cent, down from 6.01 per cent; and the average 60 per cent LTV five-year fixed mortgage rate is now 4.95 per cent, down from 5.80 per cent.
And, given the likelihood that the base rate will stay at 5.25 per cent when the Bank of England’s Monetary Policy Committee meet tomorrow, the trajectory of rates should drop for the foreseeable future, according to Rightmove.
Rightmove mortgage expert Matt Smith said: “The most recent inflation numbers have not had any material impact on rates, and they’ve continued to slowly creep downwards. The market is expecting base rate to be held at 5.25 per cent this week, [and] if this the case then we’re likely to see mortgage rates continue to trend downwards.”
What the future holds
Looking to the future, the company could not predict when rates would start to fall more substantially and consistently.
It said: “Financial markets are predicting that the base rate may be at its peak. It’s thought interest rates will remain flat for most of 2024, before starting to come down. And we can expect fixed-rate mortgage products to start to take on some of these reductions.
“We’ve seen mortgage rates edge down slowly in recent weeks, in response to the positive inflation figures. But it’s difficult to predict when we could start to see more sizeable drops in mortgage rates, mostly because their movement is dependent on several factors. Including inflation continuing to decrease, falling swap rates, and no unexpected shocks to the economy.
