The mortgage interest rate has fallen to almost 5%this week, but the choice of products has also been reduced, the latest data from MoneyFacts has been revealed.
Both the average fixed rate of two years and five -year version are currently 5.01%, which is the lowest since September 2022.
Returning back to a year ago until August 2024 and a fixed mortgage of two years was an average of 5.77%, while the five -year solution was 5.38%.
Even in the past month, the typical bi-biwed and five-year fixed rates have fallen by 0.08% and 0.07% respectively, according to Data from Geldfacts.
But while borrowers benefit from lower interest rates and Lender price reductionsThere are fewer products to choose from.
The analysis of MoneyFacts showed that the product choice was total month by month, up to 6,842 options, which canceled the previous monthly increase in choice.
The good news is, compared to this time last year, the number of mortgages has risen.
Rachel Springall, financial expert at MoneyFacts, explained: “Lenders had a mixed attitude compared to the prices in July, and the nature of products resulted in a dip in choice, which canceled the rise of the previous month.
“Despite the perhaps cautious approach, the tariff reductions prevailed to push the average mortgage interest rate of money facts to 5.04% at the start of this month, so that they are so closer to dipping below 5%.”
Will the mortgage prices fall further in 2025?
The Bank of England’s (BOOs) Interest rate reduction Last week, who saw the basic rate fall by 0.25% to 4%, the hope for more mortgage reductions can increase.
But Springall thinks that lenders will use a ‘more low and slow approach’ to make cuts in the coming weeks. This is because the Boe decision was a close call with four of the nine members who voted against a reduction. This led to an increase in exchange rates that influence the price of the lender.
She added: “The markets stack poorly on all the important decisions that are made in the autumn budget, an event that can be a blessing or a curse for a future rate setting.
“If inflation gets out of hand or economic uncertainties, borrowers can forget more basic reductions from the Bank of England this year.”
What is the prospects for first buyers
The data from MoneyFacts show that first buyers with a small down payment of 5% will have seen in the options since the The government has replaced the mortgage guarantee schedule In July.
But the data also shows that there has been a decrease in fixed rates for the first products -oriented products.
Springall said: “The big difference for first buyers and those borrow from higher LTVs as the year progresses, the changes will be in the rules of loan income (LTI).
“Lenders would be wise to do as much as possible to support new buyers, and it continues to ask essential borrowers advice to navigate through the mortgage maze.”