In its weekly mortgage tracker, Rightmove found that the average five-year fixed rate was now 4.87%, while the average two-year fixed rate was 5.25%. 

Both were down from respective averages of 4.88% and 5.27% last week, and lower than the rates of 6.07% and 6.56% last year. 

 

Markets are favouring a cut 

This month has seen a consistent flow of mortgage rate reductions, with Halifax, NatWest and TSB all lowering pricing. 

Last week, Nationwide brought back sub-4% options, with a five-year fixed rate priced at 3.99%. 

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Rightmove said a cut to the base rate would be positive for mortgage pricing, but people should not be worried if this does not happen at the August meeting. 

Matt Smith, Rightmove’s mortgage expert, said: “All eyes are on tomorrow’s Bank of England decision, where many are hoping for a first cut to the base rate for four years.

“The markets are currently favouring the likelihood of a cut, but as we’ve seen in recent weeks, this can change and I think it could go either way tomorrow.”

He added: “If the bank rate is cut, it will be really positive news and hopefully more will follow as the economy continues to stabilise. If it isn’t, people shouldn’t be too concerned – as it is highly likely it would follow in September, and I’d expect mortgage rates to hold steady and perhaps even trickle down a bit – albeit not quite as fast as if there is a cut.” 

 

Mortgage rates down since last week 

The average two-year fixed rate for a deal at 60% LTV was 4.59% this week, down from 4.62% on 24 July. Meanwhile, the average five-year fixed rate was 4.19%, down from 4.21% a week ago. 

This compared to rates of 6.22% and 5.77% in 2023 respectively. 

At 75% LTV, the average two-year fixed rate was 5.08%, compared to 5.11% last week, and the average five-year fixed rate fell from 4.76% to 4.73%. 

Last year, the two-year fixed average was 6.4% and the five-year fixed average was 5.96%. 

For a two-year fixed rate deal at 85% LTV, the average pricing was 5.27% as of 31 July, down from 5.28% a week ago, while the average five-year fixed rate fell from 4.92% to 4.91%. 

This time in 2023, the averages were 6.63% for a two-year fix at 85% LTV and 6.16% for a five-year fix. 

At 90% LTV, the rate for a typical two-year fixed deal was 5.58% and 5.12% for a five-year fix. Last week, these rates respectively sat at 5.59% and 5.13%, while a year ago, the average pricing was 6.74% and 6.18% apiece. 

For a two-year fix at 95% LTV, the average rate was 5.96% and the average five-year fix was 5.48%. These were both flat on last week’s averages. 

A year ago, the average two-year fixed rate at 90% LTV was 6.94% and the average five-year fixed rate was 6.26%. 

Rightmove calculated that the average monthly mortgage payment for a typical first-time buyer home worth £227,924, on a five-year fix at 85% LTV, was now £1,122 over a 25-year term. This was down from an average monthly payment of £1,254 a year ago, when the typical asking price was lower at £225,552.