Mortgage rates have returned to pre-mini-budget levels despite higher base rates.
- The Bank of England’s base rate remains significantly higher than before the mini-budget.
- L&C Mortgages analysed rates from top lenders to compare pre- and post-mini-budget figures.
- Two-year fixed mortgage rates show a noticeable drop compared to last year’s peak.
- Buyers with a small deposit still face slightly higher rates than before the mini-budget.
In an unexpected development, current mortgage rates have returned to their pre-mini-budget levels, notwithstanding the Bank of England’s base rate increase to 5%. This is a considerable rise from the 2.25% level prior to the mini-budget announcement. L&C Mortgages, the UK’s largest fee-free mortgage broker, conducted comprehensive research, revealing that the lowest mortgage rates are comparable or even below the levels seen before the mini-budget in September 2022.
L&C Mortgages’ study examined data from the top ten lenders, focusing on homebuyers and remortgage borrowers. The analysis considered three specific time points: just before the mini-budget, a month following the budget, and the current time. Results demonstrated that rates initially surged after the mini-budget but have relaxed as the interest rate outlook improved.
David Hollingworth, associate director at L&C Mortgages, noted the volatility experienced in the mortgage market over the past two years. He acknowledged that it is reassuring for borrowers to witness rates stabilising and returning to more manageable levels. Despite the base rate being over twice its pre-mini-budget figure, mortgage rates have largely reverted to their earlier state.
Notably, two-year fixed mortgage rates for homebuyers now stand at approximately 4.13%, a marked reduction from the October 2022 peak of 6.16%. However, those purchasing with smaller deposits, particularly with a 90% loan-to-value ratio, encounter rates that remain marginally above pre-mini-budget figures. These rates are approximately 5.06%, compared to the earlier 4.57% in September 2022.
Hollingworth emphasised the increased stability in the market, which is a stark contrast to the volatile conditions observed post-mini-budget. He remarked that this stability affords homemovers and those remortgaging an improved ability to plan their financial futures with greater confidence.
Mortgage rates have stabilised, with increased market stability offering clarity for borrowers.
