There’s some good news for those hoping to buy a home, with mortgage rates finally starting to dip. The average rates across the board are down compared to last year, according to data from property website Rightmove.

Let’s break down the numbers:

• Five-Year Fixed Mortgages: The average five-year fixed rate is now 5.04%, which is a tiny bit lower than the 5.11% seen a year ago.
• Two-Year Fixed Mortgages: The average two-year fixed rate has also edged down, from 5.47% to 5.42%.
• 85% Loan-to-Value (LTV) Five-Year Fixed Mortgages: These are popular with first-time buyers, and the average rate here has dropped from 5.10% to 5.02%.
• 60% LTV Five-Year Fixed Mortgages: Those with a larger deposit can benefit from a lower rate here, with the average dropping from 4.81% to 4.48%.

However, it’s important to remember that even with these small reductions, mortgage rates remain significantly higher than they were a few years ago. And that’s pushing up monthly payments.

Higher Monthly Payments

The average monthly mortgage payment on a typical first-time buyer home with an 85% LTV five-year fixed mortgage is now £1,135. That’s just £1 more than last year, but it still adds up over the long term.

A Call for Change

Rightmove’s mortgage expert, Matt Smith, thinks there’s a need for changes to make homes more affordable, especially for first-time buyers.

“There’s an opportunity to unlock greater affordability,” Smith says. “We’re seeing more first-time buyers taking out longer mortgages, and lenders are offering longer-term fixed rates. These could be part of the solution, as they offer certainty about payments.”

Smith also believes that new schemes and more flexible regulations could help. He wants the government to work closely with lenders and regulators to find new ways to support first-time buyers.

What This Means For You

While the slight drop in mortgage rates is positive, it’s not a huge change. You’ll still need to be careful with your finances if you’re hoping to buy a home.

If you’re thinking of getting a mortgage, make sure you:

• Shop around: Don’t just accept the first offer you see. Compare rates and deals from different lenders.
• Get advice: Speak to a mortgage broker who can help you find the best deal for your situation.
• Be realistic: Don’t borrow more than you can afford to repay, even if you’re getting a lower rate.

The future of mortgage rates is uncertain, but with a bit of research and planning, you can hopefully find a way to make your dream of homeownership a reality.