Mortgage Rate Cuts Continue at Slower Pace, Moneyfacts Data Shows
Summary:
Mortgage rates are still declining but at a slower pace, according to the latest Moneyfacts data. The average two-year fixed rate dropped slightly to 4.82%, while five-year fixes fell to 4.90%. Some lenders, including Aldermore and Vida Homeloans, made significant cuts, while others like Barclays adjusted select rates. This trend reflects a pre-Christmas slowdown in rate movements, with fewer lenders making changes.
What This Means for You:
- Opportunity for refinancing: If you’re on a variable rate, now may be a good time to lock in a lower fixed rate before potential future increases.
- First-time buyer advantage: Lower rates at higher LTVs (90-95%) mean more affordable entry points into the housing market.
- Monitor lender activity: With Kent Reliance exiting the market, competition may shift—stay alert for new deals from remaining lenders.
- Watch for post-holiday trends: Expect more significant rate movements in early 2025 as lenders reassess their strategies.
Original Post:
The pace of mortgage rate cuts is low but continuing, the latest rate watch data from Moneyfacts reveals.
Week-on-week, the average two-year fixed rate fell from 4.84% to 4.82% and the average five-year fixed rate fell by 1bps to 4.90%. Meanwhile, the Moneyfacts Average Mortgage rate fell from 4.90% to 4.88%.
This week’s Moneyfacts mortgage data follows a similar trend to last week’s, with rate cuts fading slightly.
The biggest cuts were to three-year fixes to 95% LTV, which were cut by 7bps on average to 5.29%.
Three-year fixes to 90% LTV also saw similar cuts, with the average loan being reduced by 5bps to 4.82%.
Two-year fixes to 60% LTV were increased during the week, by 1bps, to an average of 4.28%.
A 1bps rise was also recorded for five-year fixes to 60% LTV, with the average rate for these mortgages now 4.56%.
Moneyfacts products expert Caitlyn Eastell said: “Lenders have been drip feeding fixed rate reductions over the past couple of weeks, however in the slowdown to Christmas rate movements have slowed down substantially, with only four lenders amending their rates and only a handful more withdrawing or adding to their ranges.
“The cuts this week included some sizable reductions from Aldermore by up to 45bps and Vida Homeloans by up to 32bps. Barclays Mortgage was the only major lender to make changes as selected fixed rates were reduced by 20bps and a few ‘premier’ accounts were increased by 10bps.
This week also saw Kent Reliance withdraw their entire mortgage range as the brand left the market. The leading fixed rate is still held by Santander, but the rate has reduced to 3.51% for two-years.
Extra Information:
Bank of England Base Rate History – Understanding central bank rates helps predict future mortgage trends.
Mortgage Comparison Calculator – Essential tool for finding the best current deals across lenders.
People Also Ask About:
- Will mortgage rates drop further in 2025? Analysts predict modest declines if inflation continues to fall.
- What’s the difference between fixed and variable rates? Fixed rates lock in payments, while variables fluctuate with the market.
- How does LTV affect my mortgage rate? Lower loan-to-value ratios typically secure better interest rates.
- Should I remortgage now or wait? Consult a broker—current deals may beat waiting for uncertain future drops.
Expert Opinion:
“While the current slowdown in rate cuts suggests market caution, the underlying trend remains favorable for borrowers. The exit of Kent Reliance may signal consolidation in a competitive market, but Santander’s continued leadership with sub-4% rates indicates healthy competition remains. Expect lenders to reassess their positions after the holiday period, potentially leading to more aggressive pricing in Q1 2025.” – Mortgage Strategy Analyst
Key Terms:
- current mortgage rate trends UK 2025
- best fixed rate mortgage deals comparison
- how LTV affects mortgage interest rates
- when to refinance your home loan
- UK mortgage lender rate cut analysis
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