Mortgage rates continue to fall

Homeowners are experiencing a continuous decline in the average 5-year mortgage rate, now at 5.07% for the 20th consecutive week, as the Bank of England maintains interest rates at 5.25%. Though still notably high, this rate has eased from its peak of 6.11% in July, as reported by property site Rightmove.

The relief in mortgage rates follows the Bank of England's decision to keep interest rates steady at a 15-year high for the third consecutive time. To provide perspective, interest rates were at 0.1% in 2020.

Matt Smith, Rightmove’s mortgage expert, views the consistent, marginal drops in percentage points over the past 20 weeks as positive news for home-movers. As the Bank of England maintains its 5.25% rate in the final meeting of the year, the monetary policy committee's 6-3 majority vote aims to address inflation concerns.

With easing mortgage rates, those on an average 5-year deal have seen payments decrease from ￡2,068 in July to ￡1,793. First-time buyers opting for this mortgage type also benefit, with monthly payments on a typical home dropping from ￡1,254 in July to ￡1,111, according to Rightmove.

In addition, the average 2-year fixed rate has reduced from 5.55% to 5.48%, signalling a broader positive trend in the mortgage market.

While the possibility of an interest rate hold might lead to further mortgage rate drops, Rightmove suggests that lenders could delay offers until after Christmas to capitalise on the anticipated surge in demand in January. Matt Smith notes, "It's likely that lenders may hold back offering these to borrowers this side of Christmas, to take advantage of the seasonal jump in demand that usually happens in January."