Rates have finally fallen back to levels last seen two years ago as market conditions gradually improve
Mortgage rates in the UK have returned to levels seen before the market turmoil triggered by the September 2022 mini budget, according to new research from mortgage broker L&C Mortgages.
The study shows that the lowest available rates are now on par, or in some cases even lower, than they were before the fiscal event, despite the Bank of England’s base rate rising significantly in the meantime — from 2.25% prior to the mini-budget to the current 5%.
L&C examined the average rates offered by the UK’s top 10 lenders to homebuyers and remortgage customers on the day of the mini budget, one month later, and where they stand now.
In the month following the mini budget, rates surged as market uncertainty spiked. Since then, rates have gradually eased as economic conditions stabilised, allowing lenders to lower their offers.
For instance, the average two-year fixed rate for homebuyers now sits at 4.13%, down from a peak of 6.16% in October 2022. However, for borrowers with a smaller 10% deposit, rates remain slightly elevated compared to pre-mini budget levels; the average two-year fixed rate at 90% loan-to-value (LTV) is now 5.06%, up from 4.57% in September 2022.
“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,” said David Hollingworth (pictured), associate director at L&C Mortgages. “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.
“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.”
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