Research from L&C Mortgages, the UK’s largest fee-free mortgage broker, has revealed that the lowest mortgage rates are now on par or even lower than where they stood before the mini-budget of September 2022. This is despite the Bank of England’s base rate currently sitting at 5%, a significant rise from the 2.25% level before the mini-budget.
L&C’s analysis examined the average rates offered by the top ten lenders for homebuyers and remortgage borrowers at three points in time: on the morning of the mini-budget, one month after, and in the present. The results showed that while rates had surged rapidly following the mini-budget, they have since eased back as the outlook for interest rates has improved.
For instance, the average rate for a two-year fixed mortgage for homebuyers is now 4.13%, over two percentage points lower than the October 2022 spike of 6.16%. However, average rates for buyers with a smaller deposit, such as those with a 90% loan-to-value (LTV), remain slightly higher than pre-mini-budget levels, standing at 5.06% compared to 4.57% in September 2022.
David Hollingworth, associate director at L&C Mortgages, said: “The mortgage market has seen bouts of huge volatility in the last two years, so it’s encouraging for borrowers to see that rates are now in a much better place. Even though the base rate is more than twice its level prior to the mini-budget, mortgage rates are largely back to where they were.”
Hollingworth also highlighted the market’s increased stability, adding: “More importantly, the market has shown much more stability and is a world away from the skyrocketing rates post-mini-budget, allowing homemovers and remortgage borrowers to look ahead with greater certainty.”
