The 85 per cent LTV (loan-to-value) five-year mortgage rate dropped below five per cent for the first time since June — and some expect it could “continue to edge downwards”.
Sitting at 4.99 per cent, the Rightmove numbers came after the Bank of England’s decision last week to hold interest rates for the second time in a row.
Simon Gammon, managing partner at Knight Frank Finance, said the below five per cent mortgage rates would help improve property market sentiment, “but only to a point” as many borrowers are “rolling off deals below 2%”.
He added: “The Bank of England’s decision to hold at 5.25% was largely priced in, and we expect the rate of inflation to be the biggest determinant of whether we see more substantial mortgage rate cuts before the end of the year.”
The typical five-year fixed rates could ease to around 4.5 per cent by the end of the year, Gammon said, if the annual rate of inflation subsides to between four and five per cent as expected by the Bank of England.
“Most borrowers are currently opting for tracker products, taking the view that, even if the Bank does opt to raise the base rate again, they would like to benefit from cuts to the base rate next year,” he said.
Rightmove’s mortgage expert Matt Smith said: “A second consecutive pause is a good indicator that the Base Rate has reached its peak, which will be reassuring to those looking to take out a mortgage soon.
“We’ve now seen the arrival of a sub-5%, 5-year fixed rate mortgage in the important 85% loan-to-value bracket — the deposit size we see for many first-time buyers and home-movers.
Source: uk.finance.yahoo.com