MORTGAGE rates have fallen after hitting a 14-year high, bringing some relief to homeowners.
The news comes after the markets reacted positively to Rishi Sunak’s appointment as Prime Minister.
Mortgage rates rose substantially as the number of deals on the market nosedived following Kwasi Kwarteng’s mini-Budget last month.
The fall-out from the mini-Budget led sent the pound plummeting against the dollar to a low of $1.03 on September 26.
And it led the Bank of England to warn that interest rates would rise to 6% next year.
Such a move would make borrowing much more expensive and mortgage rates began to skyrocket.
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Earlier this month the average two and five-year fixed mortgage rates sat at their highest levels since 2008.
According to MoneyFacts the average two-year mortgage rate peaked at 6.65% on October 20 – up from 2.25% in the previous year.
The average five-year deal peaked at 6.51% – up from 2.55% in the previous year.
But mini-Budget u-turns initiated by the new Chancellor Jeremy Hunt and the appointment of Rishi Sunak as Prime Minister have helped stabilise the market and mortgage rates have already dropped.
The Bank of England has also predicted that interest rates might not need to hit 6% next year and forecasts now suggest they’ll hit 5% instead – softening the mortgage crisis blow.
The central bank will next make its next decision on whether or not to raise interest rates on November 3.
The average two-year-fixed mortgage rate is now down by 0.15% points on last week from 6.65% to 6.5%.
Average five-year fixed mortgage rates are also down by 0.15% points from 6.51% to 6.36%.
Nick Morrey, technical director at broker Coreco said: “Brokers have felt that with all the recent uncertainty and volatility lenders have been forced to increase rates to a higher level than was perhaps actually necessary.
“Now we seem to have a little more stability lenders are indeed scaling back on their products a little.
“In addition to this, the expectation of the base rate going to 6% has been scaled back to less than 5% resulting in pressure being reduced on the mortgage products themselves.
David Hollingworth, mortgage expert at L&C, said: “This could be the first signs that the more stable market conditions will give lenders the chance to cut rates where they can.
“It will take some time to feed through though, as many are still dealing with a big spike in demand following the mini-Budget.”
We’ve listed all the major lenders that have started lowering their mortgage rates to take into account the new market conditions.
Accord has reduced the rates on selected fixed-rate mortgages by up to 0.53% points.
The lender has also reduced the fees on selected mortgages by up to £500.
HSBC has reduced the rates on selected five-year fixed mortgages by up to 0.11% points.
Taking the cheapest mortgage rate down from 5.48% to 5.37%.
It has also reduced the rates of selected tracker mortgages by up to 0.16% points.
The lender has discounted the rates of selected variable mortgages by up to 2.9% points for two years.
Its 75% loan-to-value mortgages have seen the full 2.9% points two-year discount to variable rates.
And its 95% loan-to-value mortgages have seen a 2.5% points discount over the next two years.
The lender is offering a 2.35% points discount on its two and three-year variable rate repayment-only mortgage deals.
Meaning rates for its repayment-only mortgages sit at 3.49%,
The firm has also slashed the rates on its interest-only variable rate deals by 1.99% points.
Rates are now at 3.85% for its 80% loan-to-value mortgages. But customers will need to pay of fee of £699.
Santander has reduced the rates on selected fixed-deal mortgages by up to 0.5% points, according to MoneyFacts.
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Virgin Money has also reduced some of its mortgage rates today – with the cheapest deal now worth 5.49%.
Its subsidiary, Clydesdale Bank, has also reduced some of its rates for existing customers by up to 0.1% points.
