"It shows that despite the challenges affecting the mortgage market at the moment, lenders are keen to maximise the busy buying period and offer as low rates as possible."
- Rightmove’s mortgage expert Matt Smith
The average two and five-year fixed rate mortgage has seen reductions week-on-week, despite a turbulent economic market.
UK long-term borrowing costs reached a 27-year high last week, which industry experts have blamed on the government's tax and spending plans alongside sluggish economic growth.
The yield on 10-year gilts has reached 4.9%, the highest since 2008, while 30-year gilts yields hit their highest level since 1998.
As a result, financial markets are now predicting only 40bps worth of rate cuts for 2025 compared to 60bps at the end of December.
However, earlier this week the ONS announced that inflation eased to 2.5%, followed by GDP returning to growth. Some industry experts believe these results could prompt the Bank of England to cut rates at next month's meeting.
In addition, despite some lenders increasing rates this week, average two and five-year fixes are down on both a weekly and annual basis.
The average two-year fix is now 4.97%, down 5bps weekly and 10bps annually, while the average five-year fix has fallen by 4bps week-on-week to 4.75% and is down 3bps annually.
The lowest fixed rates are unchanged week-on-week, with the lowest two-year fix at 4.20% and five-year fix at 4.07%.
The largest weekly reductions have been seen at 85% and 90% LTV, with the average 90% LTV two-year fix seeing reductions of 0.08% and average two and five-year rates at 85% LTV down by 0.17% and 0.14% respectively.
Rightmove’s mortgage expert Matt Smith, said: "Despite all of the economic news we've had this week, average rates have fallen. It shows that despite the challenges affecting the mortgage market at the moment, lenders are keen to maximise the busy buying period and offer as low rates as possible. It's also important to note that the biggest drops we've seen are in the mass-market, for those with a smaller deposit of around 10-15%. Things are moving quite quickly day to day at the moment, but the anticipated rate cut in early February will be an important milestone to get to this year."
