The average fixed mortgage interest rate has fallen for the first time since the outbreak of the war in Iran, according to the latest figures from Moneyfacts.
The average three-year fix fell 5 basis points to 5.5% over the past week and the average two-year fix fell 3 basis points to 5.87%.
The average five-year fixed rate has also fallen by 2 basis points from 5.78% to 5.76% since last Friday.
It marks the first week-on-week decline in average fixed rates since the conflict began on February 28.
Some product categories saw steeper reductions, including an average three-year rate fix of 95% of loan-to-value, which fell 13 basis points to 5.98%, and an LTV of 85%, which fell 9 basis points to 5.53%.
Average two-year fixes at 70% LTV also fell 9 basis points to 5.58% and at 95% LTV they fell 8 basis points to 6.4%.
In addition to interest rate cuts, there has also been an increase in product availability for borrowers with smaller deposits.
Building societies have launched a number of higher loan-to-value deals, including new products with a 98% LTV range from Cambridge Building Society and a 95% LTV range from Saffron Building Society and Leeds Building Society.
A number of major lenders also cut rates during the week, including HSBC, Lloyds Bank and Santander.
In the broader market, lenders including Atom Bank, Halifax, TSB and The Co-operative Bank also cut rates, although some increased rates, including Kensington and Principality Building Society.
Moneyfacts personal finance expert Rachel Springall said: “Borrowers may be pleased to see a few lenders cutting fixed mortgage rates this week, coupled with more deals being launched for those with small deposits.
“The interest rate movements have led to the first week-on-week decline in average fixed rates since February 27, a day before the conflict began.
“This is a positive but small step in the right direction as lenders have revised their interest rates in line with recent movements in swap rates, which have been hovering around 4%.
“Before the recent ceasefire in the Middle East, there was a notable rise in swap rates and increasing speculation about a rate hike by the Bank of England in response to an expected rise in inflation this year.
“However, the future path of interest rates remains murky, and short-term pauses could change quickly.
“Now is the time for borrowers to seek advice to navigate the mortgage maze, especially as more and more deals hit the market.
“One bright spot shining in the mortgage market this week was a healthy injection of new, higher mortgage loans from building societies, which should not go unnoticed in the overall movements in fixed rates.
“Mutuals do more than just competitively price their products; they are champions of innovation and work incredibly hard to support first-time buyers with very small down payments.
“Borrowers should hope that this positive momentum in rate cuts and new deal launches continues, especially as some of the biggest banks have cut rates this week, including HSBC, Lloyds Bank and Santander.
“Looking ahead to next week, it will be interesting to see if Barclays will decide to make a move in cutting rates, as they have not adjusted their mortgage rates since early April.”
The following lenders made changes this week:
AIB (NI) – reduced by up to 23bps
Atomic bank – reduced by up to 25bps
Coventry Building Society – reduced by up to 5bps and increased by up to 18bps
Family Building Association – reduced by up to 35bps
Foundation – reduced by up to 20bps
Halifax – reduced by up to 35bps
HSBC – reduced by up to 34bps
Kensington – increased by up to 20bps
Leeds Building Society – reduced by up to 8bps and increased by up to 10bps
Leek building association – reduced by up to 20bps
Lloyd’s Bank – reduced by up to 35bps
Newcastle Building Society – reduced by up to 21bps
Nottingham Building Society – reduced by up to 20bps
Principality Building Society – increased by up to 23bps
Progressive construction company – increased by up to 49bps
Santander – reduced by up to 28bps
Skipton Building Society – reduced by up to 21bps
TSB – reduced by up to 45bps
The Cooperative Bank – reduced by up to 33bps
Vida Home Loans – reduced by up to 15bps