According to new research, the average cost of new two- and five-year fixed-rate mortgage deals has fallen below 6%.
It’s the first time in two months the cost of these fixed-rate mortgages has fallen below the 6% threshold.
The data from Moneyfacts shows the typical two-year fixed rate deal is now priced at 5.99%, with costs likely to fall further.
Two-year fixed-rate mortgage deal costs surged following September’s disastrous mini-Budget to peak at 6.65%.
However, since the appointment of Rishi Sunak as Prime Minister and Jeremy Hunt as Chancellor, borrowing costs have fallen.
The typical five-year fixed-rate mortgage fell below the 6% threshold a fortnight ago and now stands at 5.78%.
Rachel Springall, the in-house finance expert at Moneyfacts, said:
“It appears lenders are slowly making reductions to their fixed pricing to adjust their positions, and in doing so, the overall average two and five-year fixed mortgage rates now sit below 6%.
“In the weeks to come rates could fall further, particularly if mortgage lenders have targets to meet as we edge closer to the end of 2022.
“As the mortgage market remains volatile, it is vital borrowers seek independent advice to consider the deals on offer to them, or whether they need to be a little patient in hopes rates will fall further.”
The Bank of England has been raising its interest rates since last December in an attempt to tackle rising price inflation.
When mortgage borrowers come to the end of their fixed-rate mortgage deals, they face higher costs as they remortgage based on current borrowing rates.
While fixed-rate mortgage costs have been rising in line with increases to the Bank of England interest rate, they surged in September when the financial markets lost confidence in the UK government following Kwasi Kwarteng’s tax-cutting mini-Budget.
Financial markets and borrowing costs stabilised when Chancellor Jeremy Hunt announced his Autumn Statement.