Despite the suspense surrounding upcoming interest rate decisions, there’s a silver lining for potential homeowners and investors: the prices of fixed-rate mortgages are on a downward trend.
This week, Coventry Building Society announced reductions in its mortgage rates, encompassing both residential and buy-to-let deals. This follows similar moves from Santander just days before.
A Closer Look at the Numbers
According to the latest data from Moneyfacts, the average rate for a two-year fixed mortgage has fallen to 6.34% from 6.55% just a month ago in September.
If you’re considering a longer-term commitment, the average rates for five-year fixes have also decreased, now standing at 6.24%. Moreover, if you dig deeper, you can find some even more attractive deals: some five-year mortgage rates have dropped below the 5% threshold. In fact, Defaqto, another mortgage data collector, has highlighted deals offering five-year rates as low as 4.84% for those with significant deposits or equity.
Katie Brain, a consumer banking expert at Defaqto, commented on the trend, stating, “We’re finally starting to see a more positive outlook for homeowners when it comes to mortgage rates, especially as fees for the sub-5% five-year fixed rates have normalized.”
The Perfect Timing for Remortgaging
For many homeowners, these rate reductions are happening at an opportune moment. Brokers predict a surge in remortgaging this quarter (October to December), with numerous two-year fixed-rate deals set to mature. To provide some context: back in October 2021, interest rates lingered at a mere 0.1%, and mortgage deals reached record lows. Thus, anyone who locked in these low rates two years ago will now face significantly higher interest rates – potentially doubling their costs.
Consequently, rate reductions from lenders like Coventry are being greeted with enthusiasm. Peter Stamford, a director at Moor Mortgages, emphasized the importance of revisiting mortgage arrangements, advising, “If you secured a two-year deal before Christmas 2021, now’s the time to consult your adviser. Coventry’s competitive rates might be just what you need.”
Echoing this sentiment, Emma Jones from Whenthebanksaysno.co.uk added, “Given the expected influx of mortgage maturities around Christmas due to the 2021 rush, it’s wise to touch base with your adviser, especially if you’re dealing with Coventry Building Society, to explore these new rates.”
Looking Forward: The Bank of England’s Next Move
All eyes will be on the Bank of England’s monetary policy committee as they convene on Thursday, 2 November. They are set to decide on the future of the Base Rate, which presently stands at 5.25%.