This is the first time since the financial upheaval caused by the mini-budget in September 2022, one of the UK’s leading mortgage lenders has lowered its two-year fixed mortgage rate to under 5% for home purchases. It’s been since March 2020; this major lender has provided a two-year fixed rate this low.

The lender’s key rate reductions include a 0.25% decrease on fixed rate products for a term of 2 to 5 years with a loan-to-value ratio of up to 95% for those moving home. First-time homebuyers will see cuts up to 0.31% on similar products.

These reductions come as the mortgage market begins to relax for borrowers. The Bank of England has maintained the base rate at 5.25% for the last two months, reducing the funding costs for lenders.

What impact does this have on homebuyers?

These recent reductions in the rate of fixed mortgage deals are potentially beneficial for UK homebuyers in the mid-term. This means that borrowers can secure a mortgage at a lower rate of interest, potentially reducing their monthly repayments and making it more affordable to purchase a property.

The Bank of England’s decision to maintain interest rates in September and October 2023 has helped stabilise the mortgage market, making it more affordable for borrowers. Increased competition among lenders has also helped lower mortgage rates, with more lenders trying to attract borrowers by offering more competitive rates.

This rate reduction on fixed mortgage deals is expected to positively impact the housing market in the mid-term. By making home buying more affordable, there could be an increase in housing demand, which could potentially boost house prices and the overall economy.

If you are considering purchasing a home either as a first time buyer or as a home mover, it is advised to compare different mortgage offers to find the right one for you. Consult with one of our specialist mortgage advisers at Buckingham James, for advice tailored to your individual circumstances.