Soaring mortgage rates are starting to come down, with fixed-rate home loans falling to the lowest rate in six months.
According to the latest Moneyfacts UK Mortgage Trends Treasury Report, both two- and five-year fixed rates declined in February 2023, representing the fourth consecutive month of falling rates.
The average two-year fixed-rate product stood at 5.32 per cent in February, while a typical five-year fixed-rate was five per cent, which is the lowest they have been since September 2022. This was when rates began to skyrocket following the Mini Budget from the then-chancellor Kwasi Kwarteng.
Rachel Springall, finance expert at Moneyfacts, said: “The momentum in the residential mortgage market is positive, as fixed rates fell and product choice stabilised month-on-month.”
Despite this, the last time the average two-year fixed-rate was 0.32 per cent higher than the five-year equivalent was in February 2008, 15 years ago.
Therefore, homebuyers will be more inclined to take out the longer-term product to avoid paying higher interest rates.
However, this could mean they are tied to steep repayment charges if interest rates fall again.
Ms Springall also warned homeowners that standard variable rates are still high, with the average product breaking seven per cent. As a result, they could find themselves paying considerably more per month if they do not swap to a better deal.
Navigating the house-buying market at the moment can be difficult, which is why speaking to a mortgage adviser in Liverpool could help you discover your best options.