Mortgage rates experiencing a notable decline
According to Rightmove data, the average five-year fixed mortgage rate has fallen below 5% for the first time in two months. As of 3 July, it stood at 4.99%, down from an average of 5.02%. This represents a significant drop compared to last year, when the rate averaged 5.69% in 2023.
The average two-year fixed rate decreased from 5.42% to 5.37%, which is also lower than the 6.17% recorded last year. This downward trend in mortgage rates is a welcome relief for many prospective homeowners.
Positive impact on first-time buyers
The data also highlighted a beneficial impact for first-time buyers. A first-time buyer’s average monthly mortgage payment has reduced annually from £1,203 to £1,131. This calculation is based on a mortgage at 85% loan-to-value (LTV) against a typical first-time buyer home worth £227,757 over 25 years.
As of 3 July, the average two-year fixed mortgage rate for a deal at 60% loan to value (LTV) was 4.82%, consistent with the previous week. However, this tier’s average five-year fixed rate decreased slightly from 4.42% to 4.39%.
Trends in mid-range LTV Mortgages
For those with a 75% LTV mortgage, the average two-year fixed rate dropped marginally from 5.25% to 5.22% over the week. Similarly, the average five-year fixed rate reduced from 4.88% to 4.86%. These rates have gradually declined from 6.03% to 5.56% respectively.
At the 85% LTV level, the average two-year fixed mortgage rate was 5.38%, while the average five-year fixed rate was 4.99%. Both figures are lower than their previous counterparts of 5.42% and 5.01%, which decrease from last year’s rates of 6.17% and 5.68%.
High LTV mortgages show improvement
In the 90% LTV bracket, the average two-year fixed rate was 5.65%, down from 5.68% last week. This rate is also lower than the previous year’s average of 6.28%. Meanwhile, the average five-year fixed rate was 5.16% as of 3 July, slightly down from 5.19% the previous week and from 5.82% the year before.
At the highest LTV bracket of 95%, the average two-year fixed rate was 6.11%, while the average five-year fixed rate was 5.67%. Both rates are lower than their respective values of 6.12% and 5.74% and are down from the previous year’s rates of 6.75% and 6.08%.
Making an informed decision
The overall decline in mortgage rates across various LTV brackets offers a promising outlook for potential homebuyers. Whether you are a first-time buyer or looking to remortgage, understanding these trends can help you make an informed decision.
Time to look at what your mortgage options are?
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Please note: a mortgage is secured against your home or property. Your home or property may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
