The property portal said that mortgage rates peaked in July 2023 “after a period of stubbornly high inflation figures”.
Now they are significantly lower than that, following the cutting of the Bank of England base rate to 5% in August. This led to widespread mortgage rate reductions across the market.
How much can buyers save?
For buyers with a 20% deposit, the current average rate for a five-year fixed, 80% loan to value (LTV) mortgage is 4.76%, down from the peak of 6.12% last July.
In real terms, this means the average monthly mortgage payment has fallen from £1,096 last year to £949 this month, a reduction of £147, based on the average first-time buyer property price.
There are regional variations, with first-time buyers in London saving an average of £313 per month, for example, while those in the North East have seen average repayments fall by a more modest £79.
Of course, mortgage rates are still high compared to just a few years ago, before the Bank of England started raising interest rates.
Tim Bannister, Rightmove’s property expert, said: “It’s early days, but the acceleration in mortgage rate drops since the bank rate cut means that homemovers are starting to see some tangible affordability improvements, particularly against the peak-rate period of just over a year ago.
“A saving of nearly £150 in monthly outgoings for a first-time buyer compared with last year is significant, and though there will be many hoping rates drop further soon, we’re heading in the right direction ahead of the autumn season.”
