By Mark Dickety on



As inflation continues to cool, currently at 6.8% down from 7.9% in June (ONS), mortgage rates have been creeping down over recent weeks. The average cost of a two-year fixed mortgage is 6.66%. This is down from 6.85% at the start of August, its highest level since 2008 (Moneyfacts). The bank rate is widely thought to be nearing its peak, and swap rates were falling towards the end of last week, resulting in high street lenders announcing further reductions. Santander will reduce costs by up to 0.14 percentage points while Nationwide will have reductions by as much as 0.29 points. Average prices, however, remain higher than immediately after last year’s mini budget.

Lenders are becoming more competitive as the traditionally slow summer holiday period has come to an end, with lowering rates and flexible deals. First-time buyers, home movers and downsizers are all active in the market as we move into autumn. Lenders are increasingly flexible with product switching, where customers are able to move to improved deals if rates drop down the line, with potentially no cost and few administrative issues. This, alongside a brightening economic picture and increasing acceptance of a new lending landscape, is giving customers the confidence to make the move with a sense of security. For those 893,000 fixed-rate deals ending in the second half of this year (Financial Conduct Authority), mortgage deals can be locked in up to six months ahead of time, with the ability to switch if a cheaper rate comes up.

Mortgage product choice has grown to its highest level since February 2022, with 5,338 residential mortgage deals on the market, more than double the availability seen in October 2022 (Moneyfacts). The average shelf life of a mortgage deal has stabilized, jumping to 15 days, up from historic lows of 12 days in July (Moneyfacts).

Affordability remains a concern, with typical mortgage costs accounting for 35% of a homeowner’s income, up from 30% last year (Halifax). Recent Bank of England data also showed that UK residential mortgages in arrears reached a seven-year high by value in the three months to June. However, there are a wide range of affordable homeownership schemes aimed at helping more people onto the property ladder. HSBC has joined other big high street lenders in offering 40-year mortgage terms, with lower monthly payments. Shared Ownership, open to first-time buyers, home movers and downsizers alike allows a share of the property to be bought and rent to be paid on the rest. This is often cheaper than renting. Calculations on a property available on the Shared Ownership scheme show that monthly payments can work out 16% cheaper* than renting a comparable property. You can buy more shares in your home in the future. This is known as ‘staircasing’. If you buy more shares, you’ll pay less rent.

Another option could be the First Homes scheme which allows local first-time buyers, many of whom will be key workers like NHS staff and veterans, to be able to buy a home for 30% to 50% less than its market value. Deposit Unlock is another great scheme allowing customers to buy a newly built home from participating home builders with just a 5% deposit.

*Dataloft, calculated on a 3-bed property available as part of the Southern Affordable Homes Show, buying a 25% share on a £382,500 property with a 5.29% mortgage, fixed for 10 years, and with a 10% deposit.

Disclaimer: The above is for information only. Independent regulated financial advice should always be sought when considering mortgage matters.

Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances.
The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.

Mark Dickety
Mark is an experienced Mortgage and Protection Adviser who has been providing mortgage advice since 2010. He thrives on finding the right solution for each of his clients' requirements ensuring they have the best experience possible.
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Chawley and Amber have both been extremely helpful and accommodating throughout all stages of the process. I would highly recommend them to fellow first time buyers, as well as anyone needing mortgage advice. Thank you both!

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