Mortgage rates still up on last year but reductions could come soon ...

Average mortgage rates remain higher than they were last year, but the latest inflation figures could result in some cuts, a property listing firm has said.

Rightmove’s weekly mortgage tracker data showed the average two-year fixed rate came to 5.44% as of 22 May, compared to 4.92% last year. 

Meanwhile, the average five-year fixed rate was 5.05% as of today, up on the average of 4.59% a year ago. 

Rates have also crept up since last week with these being higher than the averages of 5.42% and 5.02% respectively. 

However, Rightmove predicted that there could soon be reductions if today’s inflation figures lead to a reduction in the Bank of England’s base rate. 

Matt Smith, mortgage expert at Rightmove, said: “Today’s inflation drop feels like an important milestone on the road to the first base rate cut. There’s been some to-ing and fro-ing over whether we’ll see a summer base rate cut, but today’s news will likely reinforce some of the positive words coming from the Bank of England in recent days. 

“Mortgage rates are still higher than this time last year, but hopefully this is the first domino to fall as we head towards lower mortgage rates in the second half of the year.” 

Mortgage rate changes across LTVs 

The average mortgage rate for a two-year fix at 60% loan to value (LTV) as of today was 4.89%, a small fall on last week’s average of 4.9%. For a five-year fix at the same tier, the average rate decreased from 4.53% to 4.49% this week. 

The lowest mortgage rates available at this tier were 4.75% and 4.34% respectively. 

At 75% LTV, the average two-year fixed mortgage rate was 5.31%, up on last week’s average of 5.26%, and the average five-year fixed rate rose from 4.89% to 4.95%. 

As of 22 May, the lowest rates at this level were 4.83% and 4.44% respectively. 

The average two-year fixed rate came to 5.46% at 85% LTV, while the average five-year fixed rate was 5.03%. 

These were respectively higher than last week’s averages of 5.39% and 4.95%. 

At 85% LTV, the lowest two-year fixed rate on the market was 4.99% while the cheapest five-year fix had a rate of 4.59%. 

At 90% LTV, the average two-year fixed rate was 5.66%, down from 5.67% last week, while the average five-year fixed rate came to 5.19% compared to 5.2% a week ago. 

The lowest mortgage rates available at this level were 5.11% for a two-year fix and 4.79% for a five-year fix. 

At 95% LTV, the average two-year fixed rate was 6.1%, unchanged from last week. The lowest available rate as of today was 5.52%. 

The average five-year fixed rate was also the same at 5.7%, while the cheapest rate came to 5.15%. 

Rightmove calculated that for a first-time buyer purchasing a home worth £228,003 on an average five-year fixed mortgage at 85% LTV, the monthly payment would be £1,136. This was up compared to £1,076 a month last year. 

Shekina is the deputy editor at Mortgage Solutions and commercial editor at Mortgage Solutions and Specialist Lending Solutions. She has nearly eight years of experience in the B2B publishing market, having previously covered the hospitality, retail, pet, accounting and jewellery sectors. Shekina has worked for Mortgage Solutions and Specialist Lending Solutions for almost five years. Here, she covers the market’s breaking news stories, engages with professionals in the sector, and oversees any commercially agreed content in partnership with mortgage-related companies. This includes presenting webinars and hosting roundtable discussions on developing themes in the mortgage sector. She is an NCTJ-trained journalist and was nominated for the Headline Money Awards Mortgage Journalist of the Year in 2021. In her spare time, Shekina likes to read, travel, listen to music and socialise with friends. She currently reports on current events in the mortgage market and liaises with financial clients to produce sponsored content. Follow her on Twitter at @ShekinaMS