Wednesday, September 27, 2023

Average Mortgage Rates Experience First Decline in Months, Aided by Lower Inflation

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  • Average mortgage rates have fallen for the first time in months.
  • Both two and five-year fixed-rate deals dropped, with the majority of UK mortgage holders on fixed rate deals.
  • Behind the decrease is the surprise drop in the rate of inflation, leading to lower interest rate forecasts.
  • It’s expected that the Bank of England will need to do fewer interest rate hikes to reach its 2% inflation target.
  • The mortgage bills for those with new fixed rates are still significantly higher than rates in October 2021.


As financial information company Moneyfacts reported, average mortgage rates have declined for the first time in months, with two- and five-year fixed-rate deals dropping. The average rate on a two-year fixed deal is now 6.79%, down from 6.81% on Wednesday, while the average five-year rate decreased to 6.31% from 6.33% the day before. The majority of UK mortgage holders are on fixed-rate deals.

Fixed mortgage rates have not experienced a decline since the spring. The average two-year tracker mortgage rate remains the same as on Wednesday, at 6.03%.

This rate decrease can be attributed to a surprise drop in the inflation rate, which led to lower interest rate forecasts. It is now expected that the Bank of England will need to implement fewer base interest rate hikes to achieve its 2% inflation target. Prior to the inflation announcement, some experts had anticipated the Bank’s base interest rate to exceed 6%, but it is now estimated to peak at 5.75%. This lower expected rate is now being factored in by mortgage lenders.

Despite the recent decline, mortgage bills for those who recently agreed to a new fixed rate are still significantly higher than during the years of ultra-low interest rates. In October 2021, the average rate on a five-year deal was merely 2.55%.

According to the banking industry trade body, UK Finance, it is worth noting that more than 2.4 million fixed-rate deals are set to expire between the summer and the end of 2024.

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Ethan Rivers
Ethan Rivers
Hi there! I'm Ethan Rivers, a financial enthusiast and the proud author behind the popular financial blog, "Roms Deals." With a passion for helping others achieve financial freedom, I've spent years diving deep into the intricacies of personal finance, investment strategies, and wealth management. Through my blog, I aim to demystify the world of finance and provide practical tips that anyone can apply to their financial journey. Having worked in the financial industry for over a decade, I've gained valuable insights and experience that I love sharing with my readers. From navigating the stock market to maximizing savings, I strive to equip individuals with the knowledge and tools they need to make informed financial decisions. Join me on this exciting journey towards financial empowerment and let's unlock the doors to a brighter financial future together. Welcome to "Roms Deals"!

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