The average mortgage rate has fallen to below 5% for the first time since early September, Moneyfacts has revealed.

The firm’s latest report revealed that before September, the last time the average mortgage rate fell below 5% was September 2022.

Following the impact of the mini-Budget, COVID-19 and jumps in the Bank of England’s base rate following inflation increase, the average mortgage rate increased to over 6% in October 2022.

Finance expert at Moneyfactscompare, Rachel Springall, said that the latest update will be welcome news for borrowers across the UK.

She stated: "Borrowers will no doubt be thrilled to see mortgage rates drop, particularly the millions due to come off a cheap fixed rate before the year is over. It is a notable milestone to see the Moneyfacts average mortgage rate drop below 5%, although it remains uncertain on how long this can be sustained."

Looking ahead, Springall said that while the latest figure is positive, upcoming events may lead to further movement in the average mortgage rate.

She added: "Mortgage rates are much lower thanks to base rate cuts and swap rate movements. However, sticky inflation makes it less likely for the Bank of England’s Monetary Policy Committee to unanimously agree on making more cuts. In addition, uncertainty remains surrounding what may be revealed within the Budget.

"That said, fixed rate mortgages do not always bend to the will of base rate cuts, and instead are more intrinsically linked with swap rates. Borrowers keen to refinance would be wise to seek advice to secure a new deal and not wait around for more rate cuts by the Bank of England."

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