Mortgage rates still improving as house prices close to record high
Mortgage lenders are still lowering their fixed rates following more price improvements from big banks like NatWest, HSBC, Barclays and Halifax.
Santander for Intermediaries lowered some of its fixed rates for property purchases and remortgages by up to 0.3% last week. It launched the new Best Buy two-year fix at just below 3.85% and the lowest five-year fix at just below 3.7%, although applicants will need a 40% deposit to qualify.
Both rates have £999 arrangement fees, a maximum loan size of £3 million, plus a free property valuation. MPowered Mortgages has also launched a leading three-year fix priced around 3.75%.
Please note that the cost of funding fixed rates has increased over the last few days, so there is a chance these fixed rates will rise. We will have to see how the mortgage lenders react to the pricing changes.
Tracker rate mortgage popularity rising
While most borrowers opt for fixed rates, recent data from wealth management firm Quilter shows the number of tracker mortgages taken out over the past three years jumped by 67% even as interest rates rose.
The number of tracker mortgages taken, which offer interest rates that follow the Bank of England base rate often without early repayment charges, lifted from 118,818 loans in 2021 to 198,044 by the first quarter of this year.
House prices rise close to record high
The average UK house price came close to reaching a record high last month as house prices increased for the third month in a row. Falling mortgage rates, according to Halifax, helped to boost confidence among buyers.
Halifax, the UK's largest mortgage lender, highlights the average house price hit £293,399 in September, just short of the record £293,507 reached in June 2022. House prices increased by +0.3% in September, matching the rise seen in August.
Amanda Bryden, Head of Mortgages at Halifax, said: “Market conditions have steadily improved over the summer and into early autumn. Mortgage affordability has been easing thanks to strong wage growth and falling interest rates. This has boosted confidence among potential buyers, with the number of mortgages agreed up over 40% in the last year and now at their highest level since July 2022.”
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The information contained within was correct at the time of publication but is subject to change.
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