Mortgage rates fall
Mortgage rates are now at their lowest level since March 2024. Average two- and five-year fixed rate deals fell monthly by 0.18% and 0.15% respectively, ending five consecutive months of rises.
According to Moneyfacts, the average two- and five-year fixed rates fell between July and August, to 5.77% and 5.38% respectively.
Mortgage rates are widely expected to decline further in the coming weeks, especially after the 0.25% base rate cut, the first in over four years.
Markets are pricing in a further cut in 2024, currently forecast to reach 4.67% by the end of 2024. Source: #Dataloft by #PriceHubble, Moneyfacts, HM Treasury Average of Independent Forecasts.
The figures above of course are averages.
The rate that you can get depends on many things. However, it is worth noting that whilst the average rate for a 5 year fixed deal is 5.38%, Martin Lewis’s website Moneysavingexpert.com (https://www.moneysavingexpert.com/) have recently published their latest findings.
Some 5 year fixed mortgages now start with a 3!
The Bank of England recently cut the base rate from 5.25% to 5% (i am sure you already know this). This was the first cut in over four years. As a result, tracker mortgages (which are linked to the base rate) are getting cheaper, reducing the gap between the cheapest trackers and fixed-rate mortgages.
Some lenders have since reduced the rates on their fixed deals:
- The cheapest five-year fix is now 3.84% from Barclays
- HSBC has one at 3.85%
- NatWest has also launched a five-year fix at 3.97%
- Nationwide has one at 3.99%
These are going to fall further we think. However, it is important to understand that those 5 year fixed rate deals above require a 40% deposit!
On a £250,000 mortgage at 5.38% you would pay £1,518 but at 3.84% the repayments would drop to £1,298. That’s £220 cheaper. BUT, that doesn’t really tell the whole picture.
Let’s take an example of a Harlow property that sells for £300,000.
To get a average fixed 5 year rate of 5.38%, would would need a deposit of approx £45,000.
This would mean a mortgage of £255,000 and the repayments would be approx. £1,548 per month.
The same property to get the 3.84% 5 year fixed would require a whopping deposit of £120,000.
Your mortgage would be £180,000 and the monthly repayments would only be £935.
What does the remainder of 2024 and 2025 have instore?
Going back to Jukes Estate Agents Harlow and their meeting with the Bank of England back in Nov 2023:
The Bank of England forecast two rate cuts in 2024. Will we get a second? The financial experts are split on this and we need to wait and see.
They were hopeful back then that 2025 would see 3 more rate cuts taking it down to around 4% by Dec 2025.
If this turns out to be the case then mortgages are going to reduce significantly over the next 16 months.
As Harlow Estate Agents, we are not allowed or qualified to give financial advice.
What we can do though, is point you in the direction of mortgage brokers that are arranging some fabulous deals for our buyers & sellers.
Please call us and we will give you their details.