Average mortgage rates continued to decline this week and more reductions are expected whether the base rate is cut or not, a property listing firm predicted.
In its weekly mortgage tracker, Rightmove found that the average five-year fixed rate was now 4.87%, while the average two-year fixed rate was 5.25%.
Both were down from respective averages of 4.88% and 5.27% last week, and lower than the rates of 6.07% and 6.56% last year.
Markets are favouring a cut
This month has seen a consistent flow of mortgage rate reductions, with Halifax, NatWest and TSB all lowering pricing.
Last week, Nationwide brought back sub-4% options, with a five-year fixed rate priced at 3.99%.
Rightmove said a cut to the base rate would be positive for mortgage pricing, but people should not be worried if this does not happen at the August meeting.
Matt Smith, Rightmove’s mortgage expert, said: “All eyes are on tomorrow’s Bank of England decision, where many are hoping for a first cut to the base rate for four years.
“The markets are currently favouring the likelihood of a cut, but as we’ve seen in recent weeks, this can change and I think it could go either way tomorrow.”
He added: “If the bank rate is cut, it will be really positive news and hopefully more will follow as the economy continues to stabilise. If it isn’t, people shouldn’t be too concerned – as it is highly likely it would follow in September, and I’d expect mortgage rates to hold steady and perhaps even trickle down a bit – albeit not quite as fast as if there is a cut.”
Mortgage rates down since last week
The average two-year fixed rate for a deal at 60% LTV was 4.59% this week, down from 4.62% on 24 July. Meanwhile, the average five-year fixed rate was 4.19%, down from 4.21% a week ago.
This compared to rates of 6.22% and 5.77% in 2023 respectively.
At 75% LTV, the average two-year fixed rate was 5.08%, compared to 5.11% last week, and the average five-year fixed rate fell from 4.76% to 4.73%.
Last year, the two-year fixed average was 6.4% and the five-year fixed average was 5.96%.
For a two-year fixed rate deal at 85% LTV, the average pricing was 5.27% as of 31 July, down from 5.28% a week ago, while the average five-year fixed rate fell from 4.92% to 4.91%.
This time in 2023, the averages were 6.63% for a two-year fix at 85% LTV and 6.16% for a five-year fix.
At 90% LTV, the rate for a typical two-year fixed deal was 5.58% and 5.12% for a five-year fix. Last week, these rates respectively sat at 5.59% and 5.13%, while a year ago, the average pricing was 6.74% and 6.18% apiece.
For a two-year fix at 95% LTV, the average rate was 5.96% and the average five-year fix was 5.48%. These were both flat on last week’s averages.
A year ago, the average two-year fixed rate at 90% LTV was 6.94% and the average five-year fixed rate was 6.26%.
Rightmove calculated that the average monthly mortgage payment for a typical first-time buyer home worth £227,924, on a five-year fix at 85% LTV, was now £1,122 over a 25-year term. This was down from an average monthly payment of £1,254 a year ago, when the typical asking price was lower at £225,552.
Shekina is the deputy editor at Mortgage Solutions and commercial editor at Mortgage Solutions and Specialist Lending Solutions. She has nearly eight years of experience in the B2B publishing market, having previously covered the hospitality, retail, pet, accounting and jewellery sectors.
Shekina has worked for Mortgage Solutions and Specialist Lending Solutions for almost five years. Here, she covers the market’s breaking news stories, engages with professionals in the sector, and oversees any commercially agreed content in partnership with mortgage-related companies.
This includes presenting webinars and hosting roundtable discussions on developing themes in the mortgage sector.
She is an NCTJ-trained journalist and was nominated for the Headline Money Awards Mortgage Journalist of the Year in 2021.
In her spare time, Shekina likes to read, travel, listen to music and socialise with friends.
She currently reports on current events in the mortgage market and liaises with financial clients to produce sponsored content.
Follow her on Twitter at @ShekinaMS
