Mortgage rates are falling back, but remain much higher than two years ago.
Homebuyers and remortgagors will be pleased to hear that the average two-year fixed rate is now 5.99 per cent, according to Moneyfacts.
The independent financial information provider said that this is the first time the rate has dipped under six per cent since mid-June.
The current falls in mortgage rates come as lenders compete to attract borrowers amid a slower market.
But rates are still high and those remortgaging from a two-year fix will find that they are paying an interest rate around double that the one they took out in 2021.
Breaking a psychological barrier
Sarah Coles, head of personal finance at Hargreaves Lansdown, said that crossing the six per cent threshold could be important ‘psychologically’ for buyers, prompting more to make a move.
She explained: “This could help bring a chunk of buyers back to the market. It would be balm for the agony suffered by sellers over the past few months, as their properties sit unseen on the market and their for-sale signs collect grime. However, we can’t expect to see the impact in house price figures until the spring.
“It’s not going to be a seismic shift. Given that rates are expected to fall further from here – and that drops will accelerate once rate cuts are on the cards, there are plenty who will decide to wait and see.
“However, in a property market this sluggish, an influx of new buyers will provide some welcome relief for those who have had their home on the market for months without interest.”
