Homebuyers are benefiting from mortgage rates dropping to a six-month low.
Data from comparison website Moneyfacts shows average mortgage rates on the overall two- and five-year fixed rate deals fell month-on-month by 0.21% and 0.18% respectively during September.
The overall average two- and five-year fixed rates fell between the start of August and the start of September, to 5.56% and 5.20% respectively, Moneyfacts said.
Meanwhile, the average two-year fixed rate is 0.36% higher than the five-year equivalent.
Rates are dropping at higher LTVs but remain high, the figures show, with an average 95% loan-to-value (LTV) on a five-year fix at 5.56% while someone on a 60% LTV is typically paying 4.7%.
However, product choice has fallen overall fell slightly month-on-month from 6,657 in August to 6,523 as of early September.
It comes after the Bank of England’s August interest rate cut and as NatWest last week released the latest best buy rate at 3.71% for a five-year fix on a 60% LTV.
The mortgage market now appears in a better position than the aftermath of the 2022 mini-Budget that set pricing soaring.
Rachel Springall, finance expert at Moneyfacts, said “this month marks two years since the fiscal announcement took place, and subsequent unsettled times saw significant rises to mortgage rates.
Fixed mortgage rates are now much lower than they were this time last year, but it remains the case that the average five-year average rate is lower than its two-year counterpart, which has been the case since October 2022. The start of August also brought the first Bank of England base rate cut in over four years, which has led to reductions in both the average two-year tracker rate and average Standard Variable Rate (SVR), but fixed rates remain lower on average.
Mortgage availability was impacted during August, as product choice felt its biggest month-on-month drop since February 2024, quite a contrast to the notable uplift in products seen during previous months.
A deeper dive into the LTV sectors revealed the biggest drops were at 85% and 80% LTV of 27 and 25 deals respectively. A fall in choice in these areas may come as disappointing news to those borrowers with limited deposits or equity, but choice is more plentiful than a year ago. Those borrowers ready to switch their mortgage would be wise to seek independent advice to go over their options.”
Interest rate cut has boosted rental stock – but for how long?
It’s not just homeowners and sellers who have taken advantage of the recent interest rate cut.
The level of rental stock available to tenants across major British cities has increased “notably” in the 30 days following the first base rate cut since 2020, research suggests.
Zero Deposit analysed available rental stock across 15 major cities in Britain, looking at the total number of rentals listed on the market in the 30 days since interest rates were cut from 5.25% to 5% by the Bank of England in August.
The research shows that across all major cities, there has been a significant increase in the number of homes being listed to rent.
In Edinburgh, 435 homes have entered the rental market in the last 30 days, equating to 75% of all current stock and marking a 300% increase when compared to total stock levels prior to the last base rate decision.
Neighbouring Glasgow has also seen a sharp increase, with a 207% jump seeing new rental homes listed on the market account for 67% of all current market stock.
The influx of new rental market stock has also seen available stock levels increase by more than 100% across Bradford (+137%), Bristol (+135%), Brighton (+130%), Manchester (+119%), Cardiff (+119%) and Sheffield (+109%).
Even in Leeds, where this increase in stock levels has been most measured, the 576 new rental homes to have reached the market in the last 30 days mark a 45% increase on previous stock levels and equate to 31% of all current market stock.
Sam Reynolds, chief executive of Zero Deposit, said for almost four years, landlords across the UK have had to contend with far higher interest rates than they’ve become accustomed to, not to mention the challenges that this brings, and we know from a recent survey from the Royal Institution of Chartered Surveyors that this has caused many to increasingly consider exiting the sector.
However, it certainly seems as though the first base rate cut in over four years has helped to steady the ship and spur a substantial increase in the number of rental homes reaching the market. This is, of course, great news for tenants, who stand to benefit from a greater level of rental market stock across our major cities.
Of course, with our new Labour Government stating early that inheritance tax and capital gains tax could both feature heavily in what is expected to be a ‘painful’ October Budget, this increasing market level of rental market sentiment could be somewhat short-lived.”