Mortgage Rates Begin to Drop as Product Choice Increases Says Moneyfacts

In a promising turn for homebuyers contending with recent mortgage rate hikes, Moneyfacts data indicates a surge in available home loan options. As of early September, the mortgage market offers 5,338 products, surpassing February 2022 levels and more than doubling October 2022 availability. Notably, options within the 85% LTV tier have reached unprecedented levels.

Despite anticipated Bank of England interest rate hikes, average mortgage rates are decreasing. In August, two-year fixed-rate mortgages dropped from 6.85% to 6.7%, and five-year deals decreased from 6.37% to 6.19%. While higher than 2021’s 2% average and 2022’s 4%, this trend signals borrower benefits. Rachel Springall, a finance expert at Moneyfacts, noted a surge in options for 15% deposit or equity borrowers. She encourages borrowers to explore alternative options like tracker mortgages and seek professional guidance.

Bank of England data reveals a 26.2% increase in new mortgage commitments in Q2 2023 compared to Q1, yet it remains 26.6% lower than the previous year at £61.7 billion. The data also shows a rise in house purchases, with 54% of gross advances, while remortgages constitute 32%, and buy-to-let borrowing is at its lowest since Q4 2010 at 8.1%.

Gareth Lewis, MD of MT Finance, sees this as positive, indicating borrower hesitation earlier in the year. While mortgage rates have risen from all-time lows, they remain affordable. Consumers remain cautious due to rate uncertainty. Stabilization is vital for restoring confidence, making decision-making easier once rates level off.