Average five-year fixed mortgage rate falls back below 6% mark

The average five-year fixed homeowner mortgage rate being offered by lenders has fallen back below 6%, for the first time since early July, according to a financial information website.

Across all deposit sizes, the typical five-year fixed residential mortgage rate on the market is 5.99%, Moneyfacts said.

The average rate fell from 6.03% on Wednesday.

Major mortgage lenders have been cutting rates this week, with the Bank of England base rate being left unchanged at 5.25% last Thursday.

Mortgage borrowers with chunkier deposits can choose from five-year fixes at rates below 5%.

  • Five year, 5.99%
  • Two year, 6.50%

The last time that the average five-year fixed deal was below 6% was on July 3, when it stood at 5.97%, according to Moneyfacts’ records.

The average two-year fixed residential mortgage rate is 6.50%, down from 6.53% on Wednesday.

On Wednesday, HSBC UK reduced a selection of mortgage rates by up to 0.16 percentage points.

Among the deals, it is offering borrowers with a 40% deposit a five-year fixed-rate mortgage at 4.93%, with a £999 fee, which is 0.96 percentage points lower than in July.

On Tuesday, Santander UK reduced selected mortgage rates by up to 0.50 percentage points.

The new deals include a five-year fixed rate at 4.95% with a £999 product fee for people with a 40% deposit, down from 5.10% previously.

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As we approach the final quarter of this year, we are likely to see continued stability in the mortgage market persist

Matt Smith, Rightmove

Simon Gammon, managing partner at Knight Frank Finance, said: “Lenders continued to cut mortgage rates in the wake of better inflation figures and the Bank of England’s decision to hold the base rate at 5.25% this month, which will do a lot to improve sentiment in the property market.

“We do expect more, marginal cuts during the weeks ahead, but that will soon reach a plateau. The best fixed-rate deals already start with a four, and we expect rates to settle in that range until the Bank of England opts to cut the base rate, which is unlikely before next spring at the very earliest.”

Myron Jobson, senior personal finance analyst at interactive investor, said: “While the positive news on the mortgage front is welcome, the property market remains in a state of flux. Would-be buyers and homeowners alike still face much higher monthly repayments than (in) previous years.”

Matt Smith, a mortgage expert at property website Rightmove, said on Wednesday: “Following the positive news on inflation and the Bank’s decision to hold the base rate, we have seen swap rates, the underlying costs of fixed-rate mortgages, stabilise.

“The important takeaway from last week for those looking to take out a mortgage soon is that the expectation that the base rate has now peaked is now the predominant view of the market, although there is still a sizeable but decreasing risk that we may see one more increase this winter.

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“As we approach the final quarter of this year, we are likely to see continued stability in the mortgage market persist with rates continuing to gradually drop and more lenders likely to offer sub-5% deals.”

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