MORTGAGE rates have fallen for the first time in months and it’s good news for first-time buyers.
The average rates for two and five-year fixed rate mortgages are down following the lower-than-expected fall in inflation on Wednesday.
Mortgage rates are falling and it brings some good news for first-time buyersCredit: Reuters
The average two-year fixed residential mortgage rate today is 6.79%.
This is down from an average rate of 6.81% on the previous working day, according to MoneyFactsCompare.
And the average five-year fixed residential mortgage rate today is 6.31%.
This is down from an average rate of 6.33% on the previous working day.
The number of mortgage products available has also increased to 4,495 since yesterday – up from a total of 4,316.
On Wednesday, it emerged that inflation had slowed quicker than expected, giving a glimmer of hope for under-pressure mortgage borrowers.
The Office for National Statistics said the Consumer Prices Index fell to 7.9% last month, down from 8.7% in May.
The Bank of England uses base rate rises as a tool to bring down high inflation.
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The Bank is still expected to raise interest rates – currently at 5% – at its next meeting on August 3 as it battles to bring inflation back to its 2% goal.
But experts have said the bigger-than-expected fall in inflation could see the Bank’s rate increase by a smaller 0.25 percentage points rather than another 0.5 percentage point rise.
Myron Jobson, senior personal finance analyst at Interactive Investor, said: “The decrease in rates is modest, amounting to savings of around £3 a month based on a 75% loan-to-value fixed rate mortgage with a 30-year loan term on a £300,000 home.
“But it is a sign that mortgage rates are heading in the right direction.”
While this is good news for first-time buyers on the mortgage front, it could still have an impact on house prices which could act as a further barrier to purchasing a home.
Myron said: “If a significant fall in mortgage cost occurs, it could keep house prices elevated.
“Increased mortgage affordability could lead to a higher demand for homes, which can put upward pressure on house prices.”
We’ve previously explained how the current mortgage rates are affecting homeowners.
How can I get the best mortgage deal?
Getting the best rate on your mortgage can depend on the rates available at the time, but there are several ways to land the best deal.
Usually the larger the deposit you have the lower the rate you can get.
To find the best deal use a mortgage comparison tool to see what’s available.
You can also got to a mortgage broker who can compare for you, but you may have to pay for this service.
It could cost a couple of hundred pounds but it might save you thousands on you mortgage overall.
You’ll also need to factor in fees for the mortgage, though some have no fees at all, or you can add it on to the cost of the mortgage, but beware that means you’ll pay interest on it and so will cost more in the long term.
You can use a mortgage calculator to see how much you could borrow.
Remember, that you’ll have to pass the lend …