Both two and five-year fixed-rate deals have dropped according to data from the financial information company Moneyfacts.
The average rate on a two-year fixed deal is now 6.49%, with a five-year rate at 5.99%. The majority of UK mortgage holders are
on fixed-rate deals, and with more than 400,000 people expected to move off existing fixed deals in the coming months it is seen as some welcome positive news.
Fixed mortgage rates had been consistently rising since the early part of this year, when the rate of inflation fell by less than expected. Not since mid-June had the average five- year rate fallen and not since late May had
there been a drop in the two-year average rate.
Behind the decrease is the surprise drop
in the rate of inflation, which led to lower interest rate forecasts, and it is now expected that the Bank of England will need to perform fewer base interest rate hikes to bring inflation to its 2% target.
Prior to the inflation announcement, the Bank’s base interest rate had been expected by some to exceed 6% – but is now estimated to peak at 5.75%.
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