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Five-year fixed rates fall below 6%

Typical five-year fixed rates have fallen below 6% for the first time since early July, Moneyfacts research shows.

The Bank’s move to hold the base rate at 5.25% is likely to have given lenders the confidence to cut rates.

Average 5-year fixes stand at 5.99%, while 2-year fixes cost 6.5%.

Simon Gammon, managing partner at Knight Frank Finance, said: “Lenders continued to cut mortgage rates in the wake of better inflation figures and the Bank of England’s decision to hold the base rate at 5.25% this month, which will do a lot to improve sentiment in the property market.

“We do expect more, marginal cuts during the weeks ahead, but that will soon reach a plateau. The best fixed rate deals already start with a four, and we expect rates to settle in that range until the Bank of England opts to cut the base rate, which is unlikely before next spring at the very earliest.”

Since the Bank’s move Nationwide Building Society, HSBC and NatWest are among the lenders to have made rate cuts.

Some homeowners are bracing themselves for higher payments, as around three-quarters of mortgage customers hold fixed-rate deals.

According to banking trade body UK Finance about 800,000 of these deals are ending in the second half of 2023, and about 1.6 million expiring next year.

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