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The latest data in the housing market shows a positive trend – the average rate on a five-year fixed mortgage has dropped below 5% for the first time since May 2023. According to financial information service Moneyfacts, the average five-year fixed rate reached 4.99% on Thursday, down from 5% a day earlier. While the financial saving may be small, industry experts see this drop as a significant moment, possibly indicating a shift in market sentiment. This move could potentially boost buyer confidence and encourage more competition among lenders.
In addition to the five-year fixed rate improvement, the average two-year fixed rate mortgage also saw a decrease. Falling below 5% for the first time since former Prime Minister Liz Truss’s mini-budget in September 2022, the two-year fixed rate dropped to 4.97% from 4.98% the previous day. Adam French, head of news at Moneyfacts, commented that the new data is good news for borrowers, suggesting that lenders are engaging in more competitive practices to attract customers.
Looking at the bigger picture, Peter Stimson, director of mortgages at MPowered, sees the average rate drop as positive news for potential homebuyers or those considering remortgaging. Stimson notes that while the average rates are promising, there are even lower rates available for individuals with substantial deposits or built-up equity in their homes. With lenders currently offering 7,031 residential mortgage products, up from 6,992, borrowers have more choice in the market. It is estimated that around 900,000 fixed-rate deals are due to expire in the second half of 2025, prompting many borrowers to explore their options in light of the changing rates since the mini-budget
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