Lenders launch flurry of mortgage rate cuts as five-year average goes sub-6%

Halifax, Barclays, and Clydesdale have all announced rate cuts this afternoon after moves from NatWest, Santander, and HSBC earlier this week. The average five-year fixed mortgage rate has now dipped below 6% for the first time since July, according to financial information service Moneyfacts. The typical new five-year fixed mortgage is currently at 5.99%, down from 6.03% on Wednesday.

This reduction comes as a number of lenders have revealed plans to slash their mortgage rates. Next week, Halifax is set to launch a five-year fixed rate at 4.93%, which would be the cheapest on the market. Barclays and Clydesdale Bank have also announced a series of mortgage rate cuts this afternoon.

Two-year fixed deals remain more expensive than five-year deals, partly because they are in higher demand, as borrowers hope rates will get cheaper in the next few years. The average two-year fixed mortgage rate is currently at 6.5%, down from 6.53% the previous day. However, deals are available at substantially cheaper rates, especially for those with more than 40% equity in their property or a 40% deposit.

Simon Gammon, managing partner at broker Knight Frank Finance, said: “Lenders continued to cut mortgage rates in the wake of better inflation figures and the Bank of England’s decision to hold the base rate at 5.25% this month, which will do a lot to improve sentiment in the property market.”

However, Gammon added that borrowers should not expect rates to go much lower in the near future. “We do expect more, marginal cuts during the weeks ahead, but that will soon reach a plateau,” he added. “The best fixed rate deals already start with a four, and we expect rates to settle in that range until the Bank of England opts to cut the base rate, which is unlikely before next spring at the very earliest.”

Nicholas Mendes, mortgage technical manager at broker John Charcol, advised anyone in the middle of a purchase or remortgage application to speak to a broker to see if they can get a better deal. He also suggested that those not using a broker should take the opportunity to speak to someone to ensure they get the best deal now and moving forward.

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