Moneyfactscompare.co.uk finance expert Rachel Springall explained: “Borrowers will no doubt be thrilled to see mortgage rates drop, particularly the millions due to come off a cheap fixed rate before the year is over. It is a notable milestone to see the Moneyfacts Average Mortgage Rate drop below 5%, although it remains uncertain on how long this can be sustained.”

It has been over a month since the rate last fell below 5%, (3 September – 4.99%), before then, the rate had not dipped below 5% since September 2022. Mortgage rates escalated in the aftermath of the infamous ‘mini-Budget’, with the Moneyfacts Average Mortgage Rate breaching 5% just one week afterwards. The situation for borrowers seeking a new deal only got worse as, by October, the rate rose above 6%.

Springall pointed out that the enduring uncertainty in the aftermath of the ‘mini-Budget’ led to not only a rise in rates, but lenders pulling hundreds of deals from sale.

The closest comparison to such upheaval was felt due to the COVID-19 pandemic and UK lockdown. To further pinch consumers, inflation rose to double digits and the Bank of England Base Rate rose to 5% by late June 2023. As a result, the Moneyfacts Average Mortgage Rate breached 6% again.

“Fast forwarding to the present day, mortgage rates are much lower thanks to base rate cuts and swap rate movements. However, sticky inflation makes it less likely for the Bank of England’s Monetary Policy Committee to unanimously agree on making more cuts. In addition, uncertainty remains surrounding what may be revealed within the Budget. That said, fixed rate mortgages do not always bend to the will of base rate cuts and instead are more intrinsically linked with swap rates.”

NAEA Propertymark president Mary-Lou Press commented: “It’s extremely positive to see a far more competitive lending market than only twelve months back. Consumers have faced a doubled-sided challenge in recent years with elevated inflation and heightened base rates.

“Although we have seen three base rate cuts throughout the year to date, affordability has remained challenging for many. It will be a case of all eyes on the Bank of England on Thursday, as the next base rate decision is made.”