Minor falls in average mortgage rates were seen this week, the first time that pricing has dropped across both product terms since early March.
Analysis from Moneyfacts showed a marginal 0.01% decline in both the average two- and five-year fixed mortgage rates, dropping from 5.9% to 5.89% and from 5.78% to 5.77% since the last working day.
Still, average rates remain elevated, with the average two-year fix at its highest since July 2024 and the five-year fix at its highest since November 2023.
As of 9 April, buy-to-let (BTL) mortgage rates also settled, with the average two-year deal falling from 5.47% to 5.46% and the typical five-year deal remaining at 5.77%.
While swap rates eased following the agreement of a two-week ceasefire between Iran and the US, and some lenders have cut mortgage rates, Moneyfacts said it was too soon to say this was a turning point for borrowers.
Rachel Springall, finance expert at Moneyfactscompare.co.uk, said it was worth noting that for the last 30 days and until this week, the average two-year fixed mortgage rate had only risen or remained unchanged, while five-year fixed rates followed a similar trend.
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“Today marks the first time since early March that both the two- and five-year fixed rates fell simultaneously. Although this sounds positive, fixed rates remain around 1% higher than they were at the start of March,” she said.
Springall added that it was likely that lenders would see the ceasefire as a “period of grace to slow down the pace of interest rate changes” over the next two weeks, “rather than them moving in their droves to significant rate cuts”.
She said: “Swap rates are still hovering around 4% and really, we need more reassurances on inflation forecasts to give the market a better sense on whether bank base rate might be increased in the short term. However, in the longer term, the tide could turn, and interest rates may come down again if the Strait remains open and the price of oil reduces.
“It really depends how long such unrest prolongs and its gradual impact to the cost of living.”
According to Chatham Financial, the two-year swap is currently 4.03%, up from 3.98% on 8 April, and the five-year swap is 4%, up from 3.96%.
Boost in product choice
Moneyfacts’ data showed an improvement in mortgage product choice, with residential deals rising from 6,284 to 6,302 in a day and BTL deals increasing from 4,777 to 4,815.
