Mortgages rates see biggest cuts in 16 months

Average mortgage rates for two- and five-year fixed deals have seen the greatest decline in a single month since May 2020. Data from Moneyfacts UK Mortgage Trends Treasury Report shows that for these average rates have now fallen for the third month in a row. The latest average rate for a two year fixed mortgage is 2.38%, a reduction of 0.14%, with a five year deal average of 2.63%, a 0.12% fall.

Those looking for a mortgage at 90% and 95% loan-to-value (LTV) now have significantly more choice than this time last year. There are 283 95% LTV mortgages and 570 90% LTV mortgages. Both an increase from September 2020, but still shortly behind the numbers available in September 2019 at 380 and 774 respectively. These higher LTV deals also saw the greatest rate reductions, with the average rate for a two year fixed rate mortgage at 90% falling by 0.23% to 2.85% and five year averages falling by 0.18% to 3.23%.

The intensity of competition between mortgage lenders has not been see before and has led to historically low interest rates. Those buying a property or needing to remortgage with large deposits and a clean credit history can now benefit from rates below 1% for both two and five year fixed terms. There are 72 two year fixed and 29 five year fixed rate mortgages at below 1%.

Average rates at 60% LTV have also seen reductions, with the average two year fixed rate now 1.51% and a five year fixed deal at 1.71%. This is a fall of 0.33% and 0.47% respectively since September 2019.