It is just over a month since the Bank of England cut interest rates to 5%, resulting in lower mortgage borrowing rates.
According to Moneyfacts, the average standard variable rate (SVR) has fallen below 8% for the first time since August 2023 (7.85%). It stands at 7.99%, down from 8.18% in March 2024. Many lenders have moved to pass on last month’s 0.25% base rate cut, seeing the SVR fall from 8.16% since the start of August 2024.
In September 2023 both the average two- and five-year fixed rates were above 6%, at 6.70% and 6.19%, respectively. Since the start of March 2024, the average two-year fixed rate has fallen from 5.76% to 5.56% and the average five-year fixed rate has fallen from 5.34% to 5.20%. These average rates have fallen from 5.77% and 5.38% respectively since last month.
On a 10-year fixed rate mortgage, the average rate has fallen from 5.98% to 5.63% since March 2024. The rate has fallen from 5.93% since the start of August 2024. The rate was 5.82% in September 2023.
| Mortgage market analysis | ||||||
| Average mortgage rates | Dec-21 | Sep-22 | Sep-23 | Mar-24 | Aug-24 | Sep-24 |
| Standard variable rate (SVR) | 4.40% | 5.40% | 8.09% | 8.18% | 8.16% | 7.99% |
| Two-year fixed mortgage | 2.34% | 4.24% | 6.70% | 5.76% | 5.77% | 5.56% |
| Five-year fixed mortgage | 2.64% | 4.33% | 6.19% | 5.34% | 5.38% | 5.20% |
| 10-year fixed mortgage | 2.97% | 4.33% | 5.82% | 5.98% | 5.93% | 5.63% |
| Average rates shown are as at the first available day of the month, unless stated otherwise. Source: Moneyfactscompare.co.uk | ||||||
Rachel Springall, finance commentator at Moneyfacts, said: “The mortgage market has seen a bustle of activity over the last month, with the Bank of England base rate cut, and a more favourable swap rate market, creating a positive influence on fixed rate pricing. There have also been several lenders passing on the 0.25% base rate cut to customers, leading to the Standard Variable Rate [SVR] falling below 8% for the first time since August 2023. The expectations for another base rate cut are mixed, but it looks more likely that the next drop could come in November, which is after the Budget.
“New or existing borrowers will ideally want to see mortgage rates fall further in the months to come, particularly if they are about to come off a cheap fixed deal. Any borrower looking at their options today for peace of mind could lock into a fixed mortgage early, but it would be understandable for some to adopt a ‘wait and see’ approach, hoping rates will come down by bigger margins. However, when falling off a cheap rate onto a revert rate, borrowers will typically see their monthly repayments rise, so seeking advice to weigh up all their options before their deal ends is essential. A typical mortgage being charged the current average SVR of 7.99% would be paying £383 more per month, compared to a typical two-year fixed rate*.
“Affordability remains a key issue for borrowers, particularly first-time buyers, but overall average mortgage rates are slowly dipping down to levels not seen for around six months. This month also marks the two-year anniversary of the fiscal announcement, so any borrowers about to come off a two-year fixed deal may be pleased to see the market is much more stable and lenders continue to chop rates to entice new business.”