If you are estate planning in Cheshire, there is mounting evidence that the cost of a mortgage is dropping, with lenders expecting an interest rate cut very soon.
The latest data shows that while rates are still high, the average fixed-rate two-year mortgage is now priced at 5.79%, while a five-year deal comes in at 5.39%.
This will be welcomed by mortgage payers and borrowers as evidence that fixed mortgage rates are on a downward trajectory. However, there is minimal prospect any time soon of a return to the days of ultra-low 1-2% rates. The pressure therefore is still on those remortgaging their properties at rates secured in 2019. According to the Resolution Foundation, around 1.5 million such households will see payments go up by an average of £1,800 a year.
For young people desperate to get on the property ladder, ultra-long mortgages are an increasingly popular option for reducing monthly repayment plans, although these will continue to be paid off well into retirement. Some lenders are offering alternative products, aimed at first-time buyers, such as a 99% loan-to-value mortgage.
In the broader mortgage market, higher interest rates in the last two years have resulted in fewer lender products, although there has been a rebound in 2024 with 6,940 options currently available – the highest number since 2008.
Looking forward, the expectation is that any interest rate reduction won’t take place until the Bank of England’s Monetary Policy Committee (MPC) convenes, possibly at the next scheduled September date.
