Rates are still rising, but the fall in inflation to 3.4% could mean a future cut in the base rate is back on the cards.
According to Rightmove, the average monthly mortgage payment on a typical first-time buyer-type property is now £1,101 per month, up from £1,076 a year ago (based on an average five-year fixed, 85% loan-to-value (LTV) mortgage).
The property portal noted that the average five-year fixed mortgage rate is now 4.85%, up from 4.62% a year ago.
The average two-year fixed mortgage rate is now 5.23%, up from 4.96% a year ago.
For those with a small deposit, the average 85% LTV five-year fixed mortgage rate is now 4.79%, up from 4.64% a year ago.
And the trend of rising rates continues for borrowers with large deposits or equity levels. The average 60% LTV five-year fixed mortgage rate is now 4.37%, up from 4.30% a year ago.
Expert analysis
Matt Smith, Rightmove’s mortgage expert, said: “Today’s inflation news is positive, and every day is one step closer to when we might see the first base rate reduction, and mortgage rates are likely to reduce before this.
“I don’t think this will change the course of the Bank of England’s decision on the base rate tomorrow, but I expect both the bank and homemovers will have some renewed optimism for the direction the economy and mortgage rates are heading in after today.”
Tim Bannister, Rightmove’s property expert, added: “The general feeling is one of positivity at the moment after a good start to the year for the housing market, albeit with most of the year still to go and some twists and turns likely still ahead.
“We’re seeing many buyers and sellers get on with moves after some held back last year, and in the short term, given we don’t expect any dramatic changes in mortgage rates, it looks like the trend to ‘get on with moving’ will continue.”
