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Five-year fixed mortgage rates now available below 4%

Five-year fixed-rate mortgages are available at below 4% once again.

It is a further sign the market is settling following turmoil in the autumn.

HSBC UK has reduced a five-year fixed-rate mortgage deal for borrowers with a 40% deposit to 3.99%.

The deal has a £999 fee.

It is the first time since September 2022 that a five-year fixed-rate mortgage has been offered by HSBC at a rate below 4%.

It is only available to homeowners who are remortgaging or those who are switching rates (existing customers rolling off an old deal and on to a new one with HSBC).

The move is part of a wider range of mortgage rate cuts made by HSBC UK on Tuesday, following recent reductions in swap rates, which lenders use to price mortgages.

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Many mortgage deals vanished from the market following the mini-budget last September and when mortgages returned they were priced at significantly higher rates.

In recent weeks there have been signs of the fixed-rate mortgage market settling down.

According to figures from financial information website Moneyfacts.co.uk, the average five-year fixed-rate mortgage on the market at the start of January was 5.63%.

By the start of February it had fallen to 5.20%.

Borrowers on variable rate mortgages meanwhile have been feeling the impacts of recent rises in the Bank of England base rate.

Figures released by Halifax on Tuesday show the average house price is now more than £12,000 below a peak seen last August.

Several commentators have said they expect to see house prices potentially dipping this year as rising living costs squeeze home-buyers’ budgets.

Moneyfacts.co.uk said on Tuesday morning that HSBC UK is the only lender on its records offering a sub 4% five-year fixed mortgage.

However, the website said it has seen below 4% rates offered on 10-year fixed mortgage deals by Virgin Money and Lloyds Bank.

Rachel Springall, a spokeswoman for Moneyfacts.co.uk, said: “It’s encouraging to see fixed mortgage rates coming down for borrowers looking to secure a new deal.”

She added: “Due to the unpredictable nature of the mortgage arena, it is imperative that both those looking to purchase a property or who wish to refinance seek independent advice from a broker to navigate the options available to them.”

David Hollingworth, associate director at mortgage broker L&C, said: “The thought of being able to fix at a rate lower than base rate (at 4%) would have sounded like dreamland in recent months.

“But, despite base rate continuing its upward trajectory, fixed-rates have been falling and borrowers are now faced with a very different picture.

“Although those coming to the end of a fixed-rate taken during the low in rates of recent years will still be faced with higher payments than they have been used to, it’s a far cry from the prospect of rates at 6% or more.

“These deals are beginning to offer rates that many may have feared were headed for extinction.

“Those borrowers that understandably decided to sit on their hands when rates went through the roof last October should now seriously consider if it’s time to take advantage of these significant improvements.”