Good news for first-time buyers – mortgage rates are dropping!
It’s finally happening! Mortgage rates are dropping, making it cheaper to get on the property ladder. The average five-year fixed-rate mortgage is now 4.97%, down from a hefty 5.91% a year ago. That’s a significant saving for anyone looking to buy their first home.
Two-year fixed rates are also down
If you’re after a shorter-term deal, two-year fixed rates have also fallen. The average rate is now 5.35%, a welcome drop from 6.42% this time last year.
What does this mean for monthly payments?
This all translates into a decent saving for your monthly budget. For a typical first-time buyer property, the average monthly payment on an 85% LTV five-year fixed-rate mortgage is now £1,128 – that’s £100 less than it was a year ago.
What’s behind this drop in rates?
Experts say the Bank of England’s predicted decision to cut the base rate is starting to filter through to mortgage lenders. This, coupled with a more stable political landscape, could signal a brighter outlook for the housing market in the second half of the year.
Here’s a breakdown of current mortgage rates:
85% Loan-to-Value (LTV)
| Term | Average Rate (11th July 2024) | Lowest Rate (11th July 2024) | Average Rate (A Year Ago) |
| 2-year fixed | 5.36% | 4.89% | 6.40% |
| 5-year fixed | 4.97% | 4.54% | 5.90% |
75% Loan-to-Value (LTV)
| Term | Average Rate (11th July 2024) | Lowest Rate (11th July 2024) | Average Rate (A Year Ago) |
| 2-year fixed | 5.18% | 4.72% | 6.24% |
| 5-year fixed | 4.82% | 4.36% | 5.73% |
60% Loan-to-Value (LTV)
| Term | Average Rate (11th July 2024) | Lowest Rate (11th July 2024) | Average Rate (A Year Ago) |
| 2-year fixed | 4.78% | 4.63% | 6.24% |
| 5-year fixed | 4.35% | 4.20% | 5.78% |
What’s next for the market?
While there’s no crystal ball, the recent dip in mortgage rates could encourage more first-time buyers to take the plunge. Keep an eye on rates and speak to a mortgage advisor to see how you could benefit from the current climate.