Average fixed mortgage rates in the UK have edged down slightly, but experts caution it is too early to declare a turning point for borrowers. According to Moneyfactscompare.co.uk, the average two-year fixed homeowner mortgage rate fell to 5.89% on Thursday, down from 5.90% on Wednesday, while the average five-year fixed rate dropped to 5.77% from 5.78%.
The modest decreases follow the announcement of a ceasefire deal in the Middle East, though doubts remain about its stability. Swap rates, which lenders use to price mortgages, have been volatile in recent weeks amid financial market turmoil. Despite the small dip, fixed rates are still significantly higher than at the start of March, when two-year and five-year averages stood at 4.83% and 4.95% respectively.
Rachel Springall, a finance expert at Moneyfactscompare.co.uk, described the situation as "mortgage mayhem" caused by unrest in the Middle East, which led to a flurry of rate hikes and a 17% reduction in product choice over the past month. She noted that while a few lenders have cut rates recently, it is "too soon" to say whether this signals a broader trend.
Springall added that lenders may view the ceasefire as a period of grace to slow the pace of rate changes, rather than a trigger for significant cuts. She emphasised that swap rates remain around 4%, and further reassurances on inflation forecasts are needed to gauge whether the Bank of England might increase the base rate in the short term.
