Fixed rates drop for third month in a row

Number of deals for borrowers with small deposits increases

Fixed rates drop for third month in a row

Average fixed mortgage rates across all loan-to-value (LTV) tiers on two- and five-year deals fell for a third consecutive month, according to market data provider Moneyfacts.

The average two-year fixed rate dropped between the start of October and the start of November to 6.29% from 6.47%. The average rate for five-year fixes likewise went down during the same period to 5.86% from 5.97%.

The average two-year tracker variable mortgage rate also fell month-on-month from 6.17% to 6.15%, while the average ‘revert to’ rate or standard variable rate (SVR) rose once more to 8.19% – now at the highest level since Moneyfacts recorded this data in July 2007.

The latest Moneyfacts UK Mortgage Trends Treasury Report also revealed a thriving choice of mortgage options for borrowers with small deposits.

More mortgages are now available at 95% LTV than at any point since before the fiscal announcement of September 2022, rising to a total of 254. The number of options at 90% LTV also rose month-on-month and now at its highest count since February 2022 at 709.

Product choice overall rose month-on-month for a fourth consecutive month to 5,678 options, the highest level of availability in over 15 years.

“The growing choice of mortgage options demonstrates a buoyant period for the market as the year end edges closer,” commented Rachel Springall, finance expert at Moneyfacts. “Borrowers with a limited deposit or equity of just 5% may be pleased to find more choice of deals in this sector.

“Reduced volatility in the market from lenders during October was prevalent, with the average shelf-life of deals rising to 20 days on average, up from 16 days a month previously – edging further away from the record low of 12 days that was recorded in July 2023. These are promising signs that the market is settling and could result in more time for borrowers to take advantage of new offers.”

Springall, however, said that there was no telling how long this might last, as there were growing expectations for fixed rates to fall further, and this could impact the shelf-life of competitively priced deals.

“Fixed rates on average have now dropped for the third consecutive month, and both the average two- and five-year fixed rates stand at their lowest points since June 2023,” she reiterated. “Year-on-year, the market has seen substantial recovery when it comes to choice, but there is still more room for improvement for those borrowers waiting for fixed rates to fall further before they secure a new deal.

“It is imperative borrowers approach their lender for support if they are struggling to keep up with repayments and seek independent advice to go through all the options available to them.”

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