Those who have had to put pause their home buying plans due to mortgage issues may still have a chance as new data has shown that the average five-year fixed mortgage rate has dropped below 6%.
This is the first time that the rate has dropped below 6% in seven weeks.
As a result, this may lower the cost for first-time buyers as well as existing homeowners looking to borrow for home purchases.
Prior to this fall, the average five-year fixed mortgage rate rose from 4.74% in September to 6.51% in October. This was a direct result of the Chancellor Kwasi Kwarteng’s mini-Budget which riled financial markets.
The now former chancellor promised major tax cuts without specifying how this was going to be paid for, which caused an uproar in financial markets.
Earlier in the month the rate had fallen to 6.32%, and today hit 4.95%.
Two-year fixed rates remain at 6.13% on average according to Moneyfacts data.
Rachel Springall, finance expert at Moneyfacts.co.uk, commented: “Borrowers may well breathe a sigh of relief to see that fixed mortgage rates are starting to fall, but there may be much more room for improvement.
“Borrowers who paused their home ownership plans, or indeed parked the idea of refinancing, may now be tempted to scrutinise the latest deals on offer.”
Springhall believes that rates could fall further, despite there being no clear answers as to when this will be.
She added: “Indeed, it’s been around two months since both the average two and five-year fixed mortgage rate breached 5%, but today only a handful of lenders are offering sub-5% fixed deals.
“Borrowers may feel they have to be patient for a little while longer yet before they commit to a new fixed mortgage, or even wait until next year to see how the market recovers from the recent interest rate uncertainty.”
A minimum of 100,000 people per month are coming towards the end of their current mortgage deal and are most likely to face incredibly steep rises in their monthly repayments.
Rates not only increased following the mini-budget, but also increased enormously throughout the duration of 2022 in conjunction with the Bank of England raising their interest rates to fight inflation.