UK Mortgage Rates Fall as Bank of England hold interest rates

The Bank of England's decision to hold interest rates at 5.25% is expected to result in UK mortgage rates to falling further, marking a reprieve for borrowers after nearly two years of increasing costs. The rates have been in decline since mid-summer, buoyed by positive inflation data and anticipation of the central bank's decision.

This week has seen several lenders, including TSB, Nationwide, and NatWest, announce rate cuts. Additionally, multiple lenders like Nationwide, Virgin Money, and Yorkshire Building Society have rolled out new five-year fixed rates under 5%.

The downward trend is welcome news for the property sector, buyers, and those nearing the end of their fixed-rate mortgage terms. According to Moneyfacts, the average two-year mortgage rate dropped to 6.58% on Thursday, down from a 15-year high of 6.85% at the beginning of August.

While the best deals are predominantly available to homebuyers, customers looking to remortgage might find less enticing options. Approximately 800,000 borrowers will see their fixed-rate deals conclude in the latter half of this year, based on data from UK Finance. Another 1.6 million fixed-rate deals are set to expire in 2024, raising concerns about household finances and living expenses.

The rate stabilisation comes against the backdrop of falling house prices and record surges in residential rents. As of August, private rents increased by 5.5% year on year, marking the largest annual increase since records began seven years ago.