Mortgage rates are continuing on a “short” but “downward” trend this week as lenders continue to slash rates.
Experts at Zoopla “expect” rates to fall below five percent later this year, following the summer’s peak of deals nearly hitting seven percent.
The “big six” lenders have been cutting rates following the release of August’s inflation figures, which reflected a marginal drop from 7.9 percent to 6.8 percent, with some reducing fixes by up to 0.55 percent.
Kellie Steed, Uswitch mortgage expert, commented: “According to Standard Life, Google searches for the term ‘when will mortgage rates drop’ have increased dramatically over the past few months, despite most lenders having recently announced at least modest reductions.
“We’ve also seen a short but continued downward trend in rates over the past two weeks, albeit a smaller one than most mortgage holders and prospective buyers anticipated.”
However, she noted that with mortgage approvals dropping by 10 percent in July, “rates are perhaps not yet falling quickly enough to aid affordability”.
Mortgage rates differ depending on the deal offered. Here’s a rundown of average rates available now.
Average mortgage rates this week
According to Ms Steed, the average two-year fixed-rate mortgage (75 percent Loan To Value) has now reached 6.65 percent, down from 6.75 percent just last week.
The average five-year fixed-rate mortgage rate (75 percent LTV) is 6.15 percent, dropping from 6.22 percent the week before.
Two-year variable-rate mortgage rates (75 percent LTV) are now averaging 5.94 percent, which reflects no increase compared to last week.
A two-year fixed-rate mortgage with 90 percent LTV is now averaging 6.53 percent, down from 6.54 percent last week, while the average standard variable rate (SVR) is currently resting at a staggering 8.5 percent.
Average mortgage rates across ‘big six’ lenders
Average mortgage rates across the ‘big six’ lenders, including Nationwide, Santander, HSBC, Halifax, Barclays Bank, NatWest, and Lloyds Bank, appear to be marginally lower on some products, however.
According to Ms Steed, the average two-year fixed-rate mortgage (75 percent Loan To Value) has dropped to 6.09 percent from 6.15 percent last week.
The average five-year fixed-rate mortgage rate (75 percent LTV) is also lower at 5.44 percent, from 5.49 percent the previous week.
Two-year variable-rate mortgage rates (75 percent LTV) are now averaging 5.84 percent, reflecting no change from the week before.
A two-year fixed-rate mortgage with 90 percent LTV is now averaging 6.29 percent, down from 6.44 percent last week, meanwhile, the average standard variable rate (SVR) is currently resting at 7.74 percent.
Ms Steed said: “In their monthly house price index for July, Zoopla forecast that total property sales will have fallen to their lowest level since 2012 by the end of 2023. They also reported an 18 percent drop in buyer demand over the past two months.
“Halifax’s house price index goes some way to explaining this, reporting that the current average UK home price is still around 6.7 times average earnings, despite this gap having narrowed since 2022. They also calculated that mortgage costs have risen by, on average, 22 percent in the past year.”
Combined with the cost of living crisis, Ms Steed said this means that affordability is still “out of reach” for many prospective home buyers and movers.
She added: “If you’re struggling with mortgage repayments or to find a viable remortgage, contact your lender as soon as possible. The mortgage charter puts more onus on lenders to help customers in financial distress – so be sure to look into the easements that may be available to you.
“In the meantime, we’ve seen further cuts and some lenders expanding their criteria over the past week, in an attempt to counteract some of the negative impact of the current rate environment.”
A summary of new mortgage deal reductions includes:
- Aldermore (Buy to Let (BTL) only): Introduced a limited edition two-year fixed rate deal for landlords at 5.74 percent (75 percent LTV) with a three percent fee on September 5
- Barclays: Cut fixed rates for new residential and buy-to-let by up to 0.2 percent, bringing their two-year fixed rate below the six percent mark at 5.98 percent
- BM Solutions (BTL only): Announced reductions of up to 0.71 percent across their entire range
- HSBC: Reduced fixed-rates across selected residential and buy-to-let deals for first-time buyers, home movers and remortgage by up to 0.3 percent
- Landbay (BTL only): Cut some of their broker-only five-year fixed rates by up to 0.1 percent
- NatWest: Announced cuts of up to 0.55 percent to some of their fixed and tracker rate deals from September 5
- Virgin Money: Cut fixed rates for new and existing customers by up to 0.3 percent.
