Average mortgage rates have continued to rise this week although the pace of these increases is slowing down, according to Rightmove’s mortgage expert Matt Smith.
But Smith warns that any further adverse news might prompt a further surge in rates.
“Average mortgage rates are a good indicator of trends and are useful for demonstrating the trajectory,” Smith said. “However, eligible home-buyers will likely seek the lowest rate possible, and rates lower than the average will indeed be available.”
For instance, the average mortgage rate for a 5-year fixed, 85% loan-to-value mortgage currently stands at 5.65%. In contrast, the lowest available rate for the same mortgage type is 5.24%. Both these mortgage products require a fee of approximately £999.
These average rates are derived from lenders that constitute 95% of mortgage lending in the UK, excluding some specialist lenders offering niche products at higher rates. Considering these specialist lenders and choosing a £0 fee option, the average rate for a 5-year mortgage product rises to 6.13%.
“In the current market, it’s vital for prospective borrowers to consult with a mortgage broker. They can provide invaluable assistance in choosing the best deal that fits the individual’s circumstances,” Smith adds.
As of Tuesday, 4th July 2023, the average fixed-term mortgage rates for home-buyers with 5-10% deposits have shown slight fluctuations. The 95% LTV, 2-year fixed rate saw a decrease of 0.12%, whereas the 95% LTV, 5-year fixed rate showed an increase of 0.13%. A similar pattern is seen with 90% LTV, 2 and 5-year fixed rates, both registering a 0.13% increase.
Similarly, average fixed-term mortgage rates for home-buyers with 15-25% deposits witnessed a slight increase. Both 85% LTV, 2 and 5-year fixed rates increased by 0.13% and 0.15% respectively. The 75% LTV, 2 and 5-year fixed rates saw a slightly higher increase of 0.17%.
For home buyers with larger deposits of 40%, the 60% LTV, 2 and 5-year fixed rates have also seen a small increase of 0.14% and 0.15% respectively over the last week.
