Average mortgage rates have fallen for the first time in months.
Both two and five-year fixed-rate deals have dropped, according to data from financial information company Moneyfacts.
The average rate on a two-year fixed deal is now 6.79% – down from 6.81% on Wednesday.
Meanwhile, the typical five-year rate dipped to 6.31% – a decrease from 6.33% on the day before.
Click to subscribe to the Sky News Daily wherever you get your podcasts
The majority of UK mortgage holders are on fixed-rate deals.
More than 400,000 people were expected to move off existing fixed deals between July and September, meaning they are likely to sign up to higher monthly repayments.
Fixed mortgage rates had been consistently rising since May, when the rate of inflation fell by less than expected. Not since mid-June had the average five-year rate fallen and not since late May had there been a drop in the two-year average rate.
Not every average mortgage rate has decreased. The average two-year tracker mortgage rate is the same as on Wednesday: 6.03%.
Behind the decrease is the surprise drop in the rate of inflation, which led to lower interest rate forecasts.
It’s now expected that the Bank of England will need to perform fewer base interest rate hikes to bring inflation to its 2% target.
Prior to the inflation announcement, the Bank’s base interest rate had been expected by some to exceed 6% – but is now estimated to peak at 5.75%.
Please use Chrome browser for a more accessible video player
Will interest rates fall?
The lower expected rate is now being priced in by mortgage lenders.
Overall, mortgage bills for anyone who has recently agreed a new fixed rate are still up markedly from the years of ultra-low interest rates.
Less than two years ago, in October 2021, the average rate on a five-year deal was just 2.55%.
More than 2.4 million fixed-rate deals were set to expire from summer to the end of 2024, according to banking industry trade body UK Finance.
For all the latest business News Click Here
