MILLIONS of homeowners will be breathing a sigh of relief as the average two-year fixed-rate mortgage falls below 6%.
It is the first time the average rate on a two-year fix has dipped below this level in nearly six months.
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Across all deposit sizes, the average two-year fixed-rate homeowner mortgage on the market dipped to 5.99%, falling from 6.01% on Thursday, according to MoneyFacts.
The last time this rate was below 6% was on June 16, when it was 5.98%.
The peak for two-year fixed products this year was reached on July 26, when the average rate hit 6.86%.
Lenders have been chopping their fixed rates amid signs that inflation is easing.
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James Hyde, spokesperson at MoneyFacts said: “Rates have been gently falling since early August due a combination of factors including falling inflation, base rate pauses, and reductions in swap rates – which lenders use to price fixed-rate mortgages).
“In recent weeks, a number of lenders have again begun to offer sub-5% two-year fixed deals; with lowest rates available UK-wide sitting around 4.75% at present.
“It remains to be seen if the recent rate reductions will continue, as any further rises in inflation, base rate, or swap rates may lead to a reversal.”
The average five-year fixed homeowner mortgage rate on the market eased downwards to 5.60% today, from an average rate of 5.61% on Thursday.
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Moneyfacts also counted 5,766 homeowner mortgage products available, up from 5,764 on Thursday.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “This could help bring a chunk of buyers back to the market.
“It would be balm for the agony suffered by sellers over the past few months, as their properties sit unseen on the market and their for-sale signs collect grime.
“However, we can’t expect to see the impact in house price figures until the spring.”
Below is a full list of banks and building societies slashing rates.
Nationwide
Nationwide has cut its fixed rates by up to 0.31 percentage points in a move that came into effect today.
Among its new rates, it is offering a five-year fix for home purchase at a rate of 4.29%.
This is a reduction of 0.14 percentage points and is available to home buyers with at least 40% deposit and has a £999 arrangement fee.
Nationwide’s equivalent two-year fixed rate for home purchase now starts from 4.65%.
The bank has also cut fixed rates for remortgage with five-year fixed rates from 4.68% with a £999 fee (60% LTV).
It has also cut product transfer deals, for existing borrowers looking to switch to a new deal.
Santander
Santander has reduced fixed rates on a range of its mortgage products and remortgages by between 0.03% and 0.32% today.
The bank has cut its rates on a residential purchase mortgage from 4.54% to 4.39% with a £999 fee (60% LTV).
A 90% LTV five-year fixed rate with a £999 product fee is now priced at 4.89%, down from 4.99%.
Halifax
Halifax is cutting selected fixed rates by up to 0.25 percentage points.
The lender has slashed the rate on its five-year fix for borrowers with a 40% deposit to 4.37%.
Meanwhile, the lender is also dropping a two-year fix for borrowers with a 40% deposit to 4.75%.
Both of the deals have a £999 fee.
Yorkshire Building Society
Yorkshire Building Society (YBS) is cutting rates by up to 0.35 percentage points across its fixed rate range.
YBS is offering two and three-year fixed rates deals for remortgage at 4.84% (75% loan to value) with a £1,495 fee.
A five-year fixed rate for home purchase at 90% LTV now stands at 5.24%.
This deal has no fee and pays even pays £2,000 cashback on completion.
How can I get the best mortgage deal?
Getting the best rate on your mortgage can depend on the rates available at the time, but there are several ways to land the best deal.
Usually the larger the deposit you have the lower the rate you can get.
If you’re remortgaging and your loan-to-value ratio has changed this could also give you access to better rates than before.
A change to your credit score or a better salary could also help you access better rates.
If you have a fixed rate, you could see higher rates when you come to the end of the current term after the BoE rise., either when shopping for a new fixed deal or reverting to the standard variable rate (SVR).
But if you’re nearing the end of a fixed deal soon it’s worth looking now. You can lock in current deals sometimes up to six months before your current deal ends.
Fixed rates have historically been cheaper than SVRs, but that may not be the case now, so its worth comparing the costs, and how long you want to be locked in for.
Leaving a fixed deal early will usually come with an early exit fee, so you want to avoid this extra cost.
But depending on the cost and how much you could save by switching versus sticking, it could be worth paying to leave the deal – but compare the costs first.
To find the best deal use a mortgage comparison tool to see what’s available.
You can also got to a mortgage broker who can compare for you, but you may have to pay for this service.
It could cost a couple of hundred pounds but it might save you thousands on you mortgage overall.
You’ll also need to factor in fees for the mortgage, though some have no fees at all, or you can add it on to the cost of the mortgage, but beware that means you’ll pay interest on it and so will cost more in the long term.
You can use a mortgage calculator to see how much you could borrow.
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Remember, that you’ll have to pass the lender’s strict eligibility criteria too, which will include affordability checks, and looking at your credit file.
You may also need to provide documents such as utility bills, proof of benefits, your last three month’s payslips, passports and bank statement.
You can also join our new Sun Money Facebook group to share stories and tips and engage with the consumer team and other group members.
