Average mortgage rates fell by the largest percentage since October 2024 last month, data from Moneyfacts has revealed.
The Moneyfacts UK Mortgage Trends Treasury report found average mortgage rates on overall two and five-year fixed rates fell by 0.13 per cent and 0.10 per cent to 5.39 per cent and 5.22 per cent respectively.
Moneyfacts finance expert, Rachel Springall, said: “The rate cutting momentum was prevalent during February, with the average two and five-year fixed rates seeing their biggest cuts in almost six months.”
She pointed out there was “fierce competition” in the aftermath of a typically subdued time of year but it led to the average shelf-life of a mortgage “plummeting”.
The average shelf-life of mortgage products fell from 36 days at the start of February to 16 days at the start of March.
“The churn of ranges and rate moves circulated around swap rate volatility, but also due to a drop to the Bank of England base rate near the start of the month,” Springall added.
“Lenders typically act within a couple of weeks of any fierce rises or falls to swap rates.
“However, it is uncertain whether the rate cutting sentiment will be sustained in the weeks to come, particularly by significant margins, but the millions of borrowers due to come off a cheap fixed deal will be hoping for further falls, without doubt.”
Springall also pointed out that borrowers who have little equity or a small deposit may be pleased to see rates drop lower, with the average two-year fixed rate at 95 per cent LTV seeing its biggest month-on-month cut in six months.
“Indeed, this month the rate fell by 0.11 per cent, the biggest cut since September 2024 of 0.14 per cent, when the rate was last above 6 per cent at 6.03 per cent, down from 6.17 per cent a month prior,” she said.
“It’s positive to see the rate drop further below 6 per cent for those who may need to opt for a short-term fixed mortgage due to their circumstances.”
However, the data showed that five-year equivalent at the same LTV continued to be priced lower on average, by 0.20 per cent.
“First-time buyers in particular will have exhausted most of their savings for a deposit, so it’s important to find a deal with a competitive rate, but also cost-saving incentives,” Springall added.
tom.dunstan@ft.com
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