The average cost a five-year fixed-rate mortgage has dropped below 6% for the first time in seven weeks.
Moneyfacts reports that the mortgage lenders are offering 5.95% on average for a five-year fixed-rate deal.
It is the first time rates have been under 6% since Liz Truss’s mini-budget two months ago sent markets in a tailspin.
The average two-year fixed-rate mortgage remains above 6%, at 6.13%.
On September 23, the average five-year fixed mortgage rate was 4.75%, and the two-year fix was 4.74%.
By October 20, the average five-year deal was 6.51% and a two-year product was 6.65%.
Rachel Springall, finance expert at Moneyfacts.co.uk, says this fall will be a relief to those looking to borrow: “Borrowers may well breathe a sigh of relief to see that fixed mortgage rates are starting to fall, but there may be much more room for improvement.
“As the average five-year fixed mortgage rate falls below 6% for the first time in seven weeks, borrowers who paused their home ownership plans, or indeed parked the idea of refinancing, may now be tempted to scrutinise the latest deals on offer.
Average 5-year fixed-rate mortgage in UK drops back below 6%, according to Moneyfacts (do remember that this is an average, and that you can get lower rates than this, depending on ltv, product type, etc)
— John Stepek (@John_Stepek) November 22, 2022
Rises in the Bank of England base rate have been pushing up borrowing costs.
Read more: Property: 8 homes that earn their keep
Springall added: “Borrowers may feel they have to be patient for a little while longer yet before they commit to a new fixed mortgage, or even wait until next year to see how the market recovers from the recent interest rate uncertainty.”
The finance expert said mortgages could fall further: “Indeed, it’s been around two months since both the average two and five-year fixed mortgage rate breached 5% (30 September 2022), but today only a handful of lenders are offering sub-5% fixed deals.”
Meanwhile, house sales held steady in October, with the volume of transactions increasing by 2% month-on-month, according to HM Revenue and Customs figures.
An estimated 108,480 sales took place, which was also 38% higher than in October 2021 – when a stamp duty holiday in England and Northern Ireland ended.
Watch: Will UK house prices ever fall?