Mortgage rates fall for second month running

Average fixed mortgage rates have fallen for the second month running in the UK as a heated price war between lenders continues.

A typical two-year fixed rate mortgage now includes interest at 6.47%, compared to 6.70% a month ago, Moneyfacts data revealed on Tuesday.

Interest on the average five-year fix fell below 6%, after passing the mark late last month, from 6.19% to 5.97% meanwhile.

“Fixed mortgage rates have fallen across the spectrum, signalling a positive change in the market,” Moneyfacts finance expert Rachel Springall commented.

“Overall, the average two and five-year fixed rates have now fallen for the second month running, so borrowers could find cheaper deals to choose from.”

Rates on five-year fixed 90% loan-to-value mortgages fell below 6% for the first time since July to 5.78%, Springall pointed out, marking good news for those with limited funds for a deposit.

Lenders had committed to a flurry of rate hikes during the summer as fears mounted over how high the Bank of England would lift base interest.

However, after a lower-than-expected interest rate reading for August, lenders have repeatedly cut rates on mortgages in anticipation that base interest would see a lower peak.

Though they include product fees and are targeted at those with more to deposit, Barclays PLC (LON:BARC) and Skipton Building Society now offer rates as low as 5.25% and even 3.35% respectively.

Average mortgage rates do indeed sit higher than the 5.43% and 5.23% for two and five-year fixes last year in October.

However, Springall explained that a growth in the number of deals on the market from 2,258 to 5,495 over the same period signalled stability was beginning to return.