Mortgage rates go down when the market relaxes

Sky-high mortgage rates began to fall this week, offering some respite for worried homeowners.

The average two-year fixed-rate mortgage fell 0.11 percentage point to 6.54 per cent from 6.65 per cent last week, when rates hit a 14-year high, according to analyst Moneyfacts.

Someone with a £400,000 mortgage would be £662.64 better off with the lower rate over two years.

Lenders have also cut their five-year deals, with the average rate now averaging 6.41 per cent from 6.51 per cent.

This morning Santander cut its two-year fixed rates to 0.15 per cent and five-year deals to 0.5 per cent.

This follows a move by HSBC on Tuesday, when it cut several of its remortgage rates by 0.11 percentage point. Its cheapest five-year fixed rate deal is now 5.37 per cent, down from 5.48 per cent.

Coventry Building Society has also cut its fixed rate deals, with a two-year rate of 5.7 per cent and a five-year rate of 5.34 per cent.

It also widened its range to include new two-, three- and five-year fixes, reversing recent trends where lenders rushed to pull deals off the market after former chancellor Kwasi Kwarteng’s “disastrous” mini-budget.

His successor, Jeremy Hunt, expanded this budget and the appointment of Risha Sunak as Prime Minister calmed things down.

Dominic Lipnicki, of broker Your Mortgage Decisions, says: “The market is much better than it was a few weeks ago. I hope the panic is over.”