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  • Writer's pictureMatthew Pigrome

The Silver Lining for Homeowners: Average Mortgage Rates Below 6% Amidst Inflation

Friday 3rd November 2023.


In a surprising turn of events, the average interest rate on a five-year fixed mortgage has dipped below 6% for the first time in nearly three months, offering a glimmer of hope for homeowners. In a financial landscape clouded by rising inflation, this development is being viewed as a silver lining.


As of Thursday 2nd November 2023, the average five-year fixed mortgage rate stands at 5.99%, according to financial information firm Moneyfacts. The last time it dipped below 6% was back on July 3rd. While it's essential to note that mortgage rates can still vary, this drop in the average rate is undoubtedly a welcome relief for many.

Calculating Savings: Tracking the Impact of Falling Mortgage Rates on Your Piggy Bank

It's worth highlighting that a significant portion of residential mortgages in the UK are fixed-rate deals. For the millions of homeowners navigating the ongoing cost of living crisis, this reduction in the average rate offers a reprieve. However, the picture isn't entirely rosy, as the UK Finance industry body reports that 2.4 million fixed-rate mortgages are set to expire between July 2021 and the end of 2024. This means that many individuals may soon need to transition to potentially pricier mortgage contracts.


To put this into perspective, just two years ago, in October 2021, the average rate for a five-year fixed mortgage was a substantially lower 2.55%. The subsequent increase in mortgage rates was largely propelled by the Bank of England's decision to raise the base interest rate as part of its strategy to combat soaring inflation, which currently stands at a high 6.7%—well above the Bank's target of 2%.


The Bank's approach involved a series of 14 rate hikes aimed at encouraging saving and tempering economic demand. However, this plan was unexpectedly halted as key measures of inflation began to drop. While the 6.7% inflation rate remains high, it was lower than economists had anticipated, prompting the Bank to maintain its base rate at 5.25% during its last update earlier this month.


Even before the recent official inflation data, average mortgage rates had been on a downward trajectory due to significantly reduced inflation figures. The markets responded by expecting fewer interest rate hikes, causing financial institutions to lower the rates they charged for mortgage products. This decrease in mortgage rates is not limited to five-year fixed deals; other mortgage products have also experienced reductions.


While this news is undoubtedly a relief for mortgage holders, it's essential to remember that the majority of people in the UK are renters, and they are even more vulnerable to rate increases. As the economic landscape continues to evolve, homeowners can take solace in this temporary respite, but the larger economic challenges persist. 🏡📉


🏡 Ready to Secure Your Mortgage? Act Now! 🏡

This drop in average mortgage rates offers a unique opportunity for homeowners. If you're considering purchasing a new home, refinancing, or exploring your mortgage options, now could be the perfect time to act. Don't miss out on these favorable rates in the midst of economic uncertainty. Get in touch with our experienced mortgage advisors today to explore how you can benefit from these reduced rates and secure your financial future.


Your dream home may be closer than you think. Contact us now to take the first step!


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