The average rate on a two-year fixed mortgage has fallen to its lowest level for nearly seven months, as lenders compete for custom.
Financial information service Moneyfacts said the average rate had fallen from 5.92% to 5.87% in a day. Major lenders, such as the Halifax and HSBC, have begun 2024 with rate cuts, in a bid to keep hold of customers.
More reductions are expected, but many homeowners still face high bills. Mortgage rates will remain higher than many people have been accustomed to because of significant changes over the past two years.
And millions of UK households face a jump in their mortgage costs this year as their fixed rate deals expire and borrowers are forced to renegotiate their home loans after the series of interest rate increases in decades.
Many people will experience a dramatic leap in repayments compared with the deals they were leaving behind.
The interest rate on a fixed mortgage does not change until the deal expires, usually after two or five years, and a new one is chosen to replace it. Doing nothing would leave people on a variable rate, which are currently very expensive – with an average rate of more than 8%.
However, there are signs that high mortgage rates are beginning to ease. The UK’s biggest lender, the Halifax, has already this month reduced the rate on some of its mortgage products by nearly one percentage point. Others have followed suit, such as TSB, which will make cuts to some products today, and more lenders are expected to join those two organisations with reductions – although not every product will see such large falls.
- If you have any concerns about your mortgage deal or requirements why not book a free consultation with Lifetime mortgage adviser Scott Kershaw: https://outlook.office365.com/owa/calendar/[email protected]/bookings/