The Co-operative Bank’s intermediary lending arm - Platform - has launched a range of five-year mortgage deals below 5 per cent this week as brokers welcome lender confidence returning to the market.
Since the Bank of England’s base rate hike last week, lenders have been lowering their mortgage interest rates.
According to brokers, lenders had priced in a higher base rate increase during the political and economic turmoil which ensued due to a series of unfunded tax cuts announced under former prime minister Liz Truss.
Platform’s latest five-year deals range from 4.84 per cent to 4.99 per cent interest, according to Moneyfacts.
The products require deposits of between 25 and 40 per cent and fees of up to £1,499.
No other lenders have launched five-year fixed mortgage deals with sub-5 per cent interest rates yet.
Average two and five-year interest rates still sit above 6 per cent, according to Moneyfacts.
Founder of Rose Capital Partners, Richard Campo, said he was starting to see a return to an acceptable level of pricing without having to take on too much risk and having to go variable to get a lower rate.
Lenders have also been cutting their variable rates. Skipton announced today (November 15) it had cut its two-year residential base rate tracker to 3.39 per cent.
“A month ago, the very idea of mortgage rates falling was pie in the sky,” said Campo.
“But this week we have seen 5-year fixed rates dip below 5 per cent for the first time since the ‘mini’ Budget. This is encouraging as it indicates that lender confidence is returning to the market.”
Last week (November 8), First Direct launched a 10-year fixed mortgage at 4.99 per cent interest which is also still available.
Broker at Riverside Mortgages in Teesside, Lewis Shaw, reckons other lenders’ fixed rates will “drift down” with five-year swap rates now below 4 per cent.
Swap rates are a key indicator for mortgage rates.
“So the five-year swap rate today is 3.9 per cent in comparison to 4.9 per cent a month ago. There’s a lag between swaps falling and fixed rates so things are looking more positive, and hopefully the shape of things to come.”
Some lenders have also been offering borrowers 12-month mortgage offer periods. These products allow brokers to lock in an interest rate which will then be valid for up to a year for their clients.
Skipton has done this for both purchase and remortgage deals for up to 12 months. Meanwhile, Halifax and NatWest have also extended offers on new builds for up to 12 months.
Brokers have said year-long mortgage offer periods are “exactly what the market needs” following the uncertainty around interest rates which ensued after the last budget.
ruby.hinchliffe@ft.com
