The latest research by Moneyfacts shows that the month-on-month cuts to average mortgage interest rates are the largest they have been since May of last year.
There were further reductions in average interest rates for both five-year and two-year fixed loans during August, which marks the third month in a row where that was the case. When it comes to fixed rate five-year loans, there was a cut of 0.12% in the average interest rate, while for two-year ones, the reduction was 0.14%. That leaves the average interest rate for the former at 2.63%, and the latter at 2.38%.
This represents the biggest monthly reduction in average rates for both mortgage types since last May, before the Covid-19 pandemic began to bite the industry. It also means that interest rates for both are currently the lowest they have been since October of last year.
This is being attributed to a battle among lenders to win over customers amid a crowded market. There has been a sizeable increase in the volume of 95% and 90% LTV mortgages available, and both have also seen large rate cuts. In particular, rates for 90% LTV products have been reduced sharply, which is no coincidence.
According to Financial Reporter, Eleanor Williams from Moneyfacts said that this was the 11th month in a row where the number of products went up, showing how the sector was bouncing back from the pandemic.
Any advisor with a CeMAP qualification will welcome these rate cuts, especially as house prices continue to rise.