Borrowers coming to the end of their existing fixed-rate mortgage deal and those looking to arrange a new mortgage will be pleased to see that 2-year and 5-year fixed-rate deals have been consistently falling over the last 4 months. The average fixed-rate mortgage deal is now the lowest that it has been for 6 months.
What is happening to fixed mortgage rates?
The average interest rate available on a 2-year fixed-rate mortgage has fallen from 6.86% in July this year to 5.99% as lenders continue to reduce rates, competing for top spot in our mortgage best buy tables. Those keeping an eye on our 'Best mortgage rates in the UK' article will have seen lots of movement in recent weeks as lenders compete to offer the best mortgage rates, with several lenders now offering 2-year fixed rate mortgage deals below 5%.
According to Moneyfacts, the choice of mortgage products is the highest it has been since 2008 with more than 5,500 mortgage products available to borrowers. The regular repricing of mortgage rates has meant that the average shelf-life of a mortgage product has fallen to 17 days. Lenders such as Nationwide Building Society, Virgin Money and Barclays among others have repriced their fixed-rate mortgage deals several times over the last few months, vying for the most competitive rates. Equally, we have seen 5-year fixed rate deals fall and the best rates remain more competitive than 2-year fixed deals at around 4.5%.
The interest rate rises that occurred after the mini-budget of September 2022 were exacerbated by inflationary factors but with the rate of inflation now falling and the Bank of England base rate remaining at 5.25% since August, borrowers may be seeing a glimmer of positive change.
How to get the best mortgage rate
The best mortgage deals are available for lower loan-to-value mortgages but even those with smaller deposits should be able to secure a good mortgage deal.
Remortgaging to the best new mortgage deal
Although it may feel simpler and easier to complete a product transfer with your existing mortgage lender, searching the whole market may offer you far better terms if you are remortgaging. If your income and financial circumstances mean that you can afford to switch lenders, you could find a more competitive mortgage rate. You can read more about the pros and cons of doing so in our article, 'What is a product transfer and is it better than a remortgage?'.
Remember to start your remortgaging process sooner rather than later if you are coming to the end of your mortgage deal. You can start as early as 6 months before your mortgage deal ends and you may be able to fix a mortgage deal while keeping your eye on other deals that appear in the run-up to the end of your mortgage deal period. Mortgage brokers* can usually help you stay abreast of any changes in the market so that you fix the best mortgage rate for you.
Securing the best rate for first-time buyers and home movers
House prices have stabilised somewhat over the last two months as we see more mortgage deals available to homebuyers and movers with 5% deposits or equity in their homes. An even larger number of mortgage deals are available at 90% loan-to-value (LTV). Further insight about this can be found in our article 'What is going to happen to house prices?'.
Borrowers would be wise to seek expert mortgage guidance* to choose the best options when selecting a fixed deal given the current mortgage climate and the amount of movement that is taking place.
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