Average five-year fixed mortgage rate less than 6% for first time in seven weeks

The average five-year fixed mortgage rate has dropped below 6% for the first time in seven weeks, according to analysis.

Mortgage lenders are offering 5.95% on average for a five-year fixed-rate deal, Moneyfacts.co.uk found.

The average two-year fixed-rate mortgage remains above 6%, at 6.13%.

Mortgage rates rocketed amid market turmoil after the mini-budget in September.

On September 23, the average five-year fixed mortgage rate was 4.75%, and the two-year fix was 4.74%.

By October 20, the average five-year deal was 6.51% and a two-year product was 6.65%.

Rachel Springall, a finance expert at Moneyfacts.co.uk, said: “Borrowers who paused their home ownership plans, or indeed parked the idea of refinancing, may now be tempted to scrutinise the latest deals on offer.

“After the fiscal announcement (on September 23) the average two and five-year fixed mortgage rates rose sharply, but they are edging further away from their daily peak (on October 20).

“However, it is worth noting that rates could fall further still, but there is no clear answer as to how quickly that may be.”

Rises in the Bank of England base rate have been pushing up borrowing costs.

Ms Springall added: “Borrowers may feel they have to be patient for a little while longer yet before they commit to a new fixed mortgage, or even wait until next year to see how the market recovers from the recent interest rate uncertainty.”

Nationwide Building Society announced rate cuts to some of the mortgages it is offering. The cuts, of up to 0.3 percentage points, will be made tomorrow.

The Society said the new rates will include a two-tear tracker rate for people with a 15% deposit, reduced by 0.3 percentage points to 3.94%, with a £999 fee.

They also include a five-year fixed rate re-mortgage deal for people with a 40% deposit, reduced by 0.26 percentage points to 4.93%, with a £999 fee.

Henry Jordan, director of mortgages at Nationwide Building Society, said: “Continued market stability and the downward trend in swap rates have meant we’ve been able to make further rate reductions on a large number of products across our mortgage range.”