Biggest monthly mortgage rate cuts since May 2020

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Eleanor Williams, Press Officer
Eleanor Williams, Press Officer / Finance Expert T: 01603 476205 E: Email Eleanor
13/09/2021

Biggest monthly mortgage rate cuts since May 2020

Biggest monthly mortgage rate cuts since May 2020

Data from the latest Moneyfacts UK Mortgage Trends Treasury Report illustrates that continued competition from providers has resulted in the largest month-on-month average rate reductions in the overall two- and five-year fixed rates that we have recorded since May 2020.

 

Data from the latest Moneyfacts UK Mortgage Trends Treasury Report illustrates that continued competition from providers has resulted in the largest month-on-month average rate reductions in the overall two- and five-year fixed rates that we have recorded since May 2020.

 

  • For the third consecutive month, both the average overall two-year and five-year fixed rates fell. The average two-year fixed rate dropped by 0.14% to 2.38%, while the five-year equivalent reduced by 0.12% to 2.63%, both currently at their lowest in 11 months (2.38% and 2.62% respectively in October 2020). For both averages these are the largest month-on-month reductions seen since the onset of the pandemic when between April and May 2020 rates fell by 0.27% and 0.31% respectively.
  • Not only are the number of deals available at 90% and 95% loan-to-value far above what was on offer this time last year, but also the largest rate falls this month were recorded in the 90% loan-to-value (LTV) tier. Here the average two-year fixed rate fell by 0.23% to 2.85% (the lowest this has been since June 2020) and the five-year equivalent reduced by 0.18% to 3.23% (the lowest since July 2020). 
  • The rate war also continues at the opposite end of the LTV spectrum where the average two- and five-year fixed rates at 60% LTV fell by 0.04% and 0.08% respectively to 1.51% and 1.71% this month. Compared to the equivalent rates in September 2019, these are now a staggering 0.33% and 0.47% respectively lower as providers work to attract borrowers.
  • For the third consecutive month, both the average overall two-year and five-year fixed rates fell. The average two-year fixed rate dropped by 0.14% to 2.38%, while the five-year equivalent reduced by 0.12% to 2.63%, both currently at their lowest in 11 months (2.38% and 2.62% respectively in October 2020). For both averages these are the largest month-on-month reductions seen since the onset of the pandemic when between April and May 2020 rates fell by 0.27% and 0.31% respectively.
  • Not only are the number of deals available at 90% and 95% loan-to-value far above what was on offer this time last year, but also the largest rate falls this month were recorded in the 90% loan-to-value (LTV) tier. Here the average two-year fixed rate fell by 0.23% to 2.85% (the lowest this has been since June 2020) and the five-year equivalent reduced by 0.18% to 3.23% (the lowest since July 2020). 
  • The rate war also continues at the opposite end of the LTV spectrum where the average two- and five-year fixed rates at 60% LTV fell by 0.04% and 0.08% respectively to 1.51% and 1.71% this month. Compared to the equivalent rates in September 2019, these are now a staggering 0.33% and 0.47% respectively lower as providers work to attract borrowers.

Mortgage market analysis

 

Sep-19

Sep-20

Aug-21

Sep-21

Fixed and variable rate products

Total Product Count - all LTVs

5,053

2,412

4,660

4,812

Product Count - 95% LTV

380

14

275

283

Product count - 90% LTV

774

62

563

579

Product count - 60% LTV

580

441

577

587

All LTVs

Average two-year fixed rate

2.46%

2.24%

2.52%

2.38%

Average five-year fixed rate

2.79%

2.49%

2.75%

2.63%

95% LTV

Average two-year fixed rate

3.23%

4.48%

3.69%

3.57%

Average five-year fixed rate

3.64%

4.02%

3.93%

3.83%

90% LTV

Average two-year fixed rate

2.64%

3.32%

3.08%

2.85%

Average five-year fixed rate

2.95%

3.50%

3.41%

3.23%

60% LTV

Average two-year fixed rate

1.84%

1.77%

1.55%

1.51%

Average five-year fixed rate

2.18%

2.01%

1.79%

1.71%

Data shown is as at the first available day of the month, unless stated otherwise. Source: Moneyfacts Treasury Reports

Mortgage market analysis

 

Sep-19

Sep-20

Aug-21

Sep-21

Fixed and variable rate products

Total Product Count - all LTVs

5,053

2,412

4,660

4,812

Product Count - 95% LTV

380

14

275

283

Product count - 90% LTV

774

62

563

579

Product count - 60% LTV

580

441

577

587

All LTVs

Average two-year fixed rate

2.46%

2.24%

2.52%

2.38%

Average five-year fixed rate

2.79%

2.49%

2.75%

2.63%

95% LTV

Average two-year fixed rate

3.23%

4.48%

3.69%

3.57%

Average five-year fixed rate

3.64%

4.02%

3.93%

3.83%

90% LTV

Average two-year fixed rate

2.64%

3.32%

3.08%

2.85%

Average five-year fixed rate

2.95%

3.50%

3.41%

3.23%

60% LTV

Average two-year fixed rate

1.84%

1.77%

1.55%

1.51%

Average five-year fixed rate

2.18%

2.01%

1.79%

1.71%

Data shown is as at the first available day of the month, unless stated otherwise. Source: Moneyfacts Treasury Reports

Eleanor Williams, Finance Expert at Moneyfacts, said:

“September marks the eleventh consecutive month of growth in total mortgage availability as the sector demonstrates resilience in the aftermath of an unprecedented 18-months. Rising by 152 this month, there are now 4,812 options for borrowers to consider. This is almost double the amount that was on offer this time last year (September 2020 – 2,412) and the highest this total has been since March 2020 (5,222) at the onset of the pandemic, as borrowers’ level of choice has improved across the LTV tiers (except for the limited 100% LTV bracket).

“Those with smaller levels of deposit may be pleased to see that at 90% and 95% loan-to-value (LTV) there are now 579 and 283 products on offer, compared to just 62 and 14 this time last year when lenders had withdrawn swathes of higher risk, high LTV products. Even though availability in these top lending brackets remains below pre-pandemic levels, this month the most significant rate drops were recorded at 90% LTV, where the average two- and five-year fixed rates fell by 0.23% and 0.18% respectively. The average two-year fixed rate at 90% LTV has breached 3% for the first time since July 2020 and is at its lowest since June 2020 when it hit 2.30%, indicating that lenders may be competing for business in this arena.

“Housing supply remains a key issue however, and whilst the Stamp Duty Land Tax (SDLT) holiday fuelled market movement, the level of demand has meant a continued rise in house prices. According to Halifax these rose to a record high in August, and while the pace of increase has slowed slightly, evidence of the ‘race for space’ remains. It is unknown whether borrowing levels will subdue in the months ahead, accounting for a seasonal slow-down and the fact that many consumers are returning to work or taking a much-needed break, but there seems to be no signs of lenders easing off the rate war.

“Those looking to move will need to act quickly in their property search and those looking to remortgage could save a significant sum by taking advantage of a low-rate deal. Lenders are keen to take on new business and due to the market volatility, borrowers would be wise to seek independent advice to navigate the growing choice to ensure they find the most appropriate mortgage package for their circumstances.”

Moneyfacts Treasury Reports are the definitive monthly analysis of Mortgage and Savings trends emailed in PDF format. Unsecured Lending trends analysis is emailed quarterly. Available by annual subscription, please call (01603) 476850.

Eleanor Williams, Finance Expert at Moneyfacts, said:

“September marks the eleventh consecutive month of growth in total mortgage availability as the sector demonstrates resilience in the aftermath of an unprecedented 18-months. Rising by 152 this month, there are now 4,812 options for borrowers to consider. This is almost double the amount that was on offer this time last year (September 2020 – 2,412) and the highest this total has been since March 2020 (5,222) at the onset of the pandemic, as borrowers’ level of choice has improved across the LTV tiers (except for the limited 100% LTV bracket).

“Those with smaller levels of deposit may be pleased to see that at 90% and 95% loan-to-value (LTV) there are now 579 and 283 products on offer, compared to just 62 and 14 this time last year when lenders had withdrawn swathes of higher risk, high LTV products. Even though availability in these top lending brackets remains below pre-pandemic levels, this month the most significant rate drops were recorded at 90% LTV, where the average two- and five-year fixed rates fell by 0.23% and 0.18% respectively. The average two-year fixed rate at 90% LTV has breached 3% for the first time since July 2020 and is at its lowest since June 2020 when it hit 2.30%, indicating that lenders may be competing for business in this arena.

“Housing supply remains a key issue however, and whilst the Stamp Duty Land Tax (SDLT) holiday fuelled market movement, the level of demand has meant a continued rise in house prices. According to Halifax these rose to a record high in August, and while the pace of increase has slowed slightly, evidence of the ‘race for space’ remains. It is unknown whether borrowing levels will subdue in the months ahead, accounting for a seasonal slow-down and the fact that many consumers are returning to work or taking a much-needed break, but there seems to be no signs of lenders easing off the rate war.

“Those looking to move will need to act quickly in their property search and those looking to remortgage could save a significant sum by taking advantage of a low-rate deal. Lenders are keen to take on new business and due to the market volatility, borrowers would be wise to seek independent advice to navigate the growing choice to ensure they find the most appropriate mortgage package for their circumstances.”

Moneyfacts Treasury Reports are the definitive monthly analysis of Mortgage and Savings trends emailed in PDF format. Unsecured Lending trends analysis is emailed quarterly. Available by annual subscription, please call (01603) 476850.

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Notes to editors

Pioneering financial comparison technology for over 30 years.

Moneyfacts Group plc is the UK’s leading provider of retail financial product data. Used by virtually every bank and building society in the UK, and supplied to the Bank of England, Financial Conduct Authority, Financial Ombudsman Service, HM Treasury, Prudential Regulatory Authority and UK Finance.

Our expert research team monitors the thousands of mortgages, savings, credit card, personal loan, business banking, life, pension and investment products in the UK.

Moneyfacts is the UK's leading independent provider of finance product data. For over 30 years Moneyfacts' information has been a key driver behind personal finance product decisions.

For more information about us please see our key facts.

Broadcast

Our broadcast suite enables our finance experts to appear in-vision for television, and we regularly comment live on national and regional radio.

To arrange an interview for radio or television, please contact our press department. We have an in-house broadcast room with ISDN (01603 230551) and Skype (Moneyfacts).

 

Notes to editors

Pioneering financial comparison technology for over 30 years.

Moneyfacts Group plc is the UK’s leading provider of retail financial product data. Used by virtually every bank and building society in the UK, and supplied to the Bank of England, Financial Conduct Authority, Financial Ombudsman Service, HM Treasury, Prudential Regulatory Authority and UK Finance.

Our expert research team monitors the thousands of mortgages, savings, credit card, personal loan, business banking, life, pension and investment products in the UK.

Moneyfacts is the UK's leading independent provider of finance product data. For over 30 years Moneyfacts' information has been a key driver behind personal finance product decisions.

For more information about us please see our key facts.

Broadcast

Our broadcast suite enables our finance experts to appear in-vision for television, and we regularly comment live on national and regional radio.

To arrange an interview for radio or television, please contact our press department. We have an in-house broadcast room with ISDN (01603 230551) and Skype (Moneyfacts).

 

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Rachel Springall Press Officer / Finance Expert
Eleanor Williams Press Officer / Finance Expert