We use cookies to allow us and selected partners to improve your experience and our advertising. By continuing to browse you consent to our use of cookies. You can understand more and change your cookies preferences here.
When you click on a retailer link on our site, we may earn affiliate commission to help fund our not-for-profit mission.Find out more.
Lenders cut the cost of their fixed-rate and tracker mortgages in January, but is this a flash in the pan or a sign that cheaper mortgage deals are returning?
After a year of price rises, mortgages are dropping in cost again, with a host of banks amending their rates last month.
Here, we explain the latest market trends and offer advice on finding the right mortgage, whether you're buying a home or switching your deal.
Last year, fixed-rate and tracker mortgages became more expensive at almost all loan-to-value (LTV) ratios, as lenders faced higher funding costs and passed on rises in the Bank of England base rate.
In February 2019, however, the average price of mortgages dropped slightly, as shown in the chart below, offering some welcome good news for homebuyers and remortgagers.
Despite these price reductions, there's still some distance to go before we see the kind of record-low rates that were on offer a year ago, before the base rate increased to 0.75%.
Five-year fixed-rate deals are leading the charge, however, with greater competition resulting in average rates being just 0.06% higher than last February.
Type of mortgage | February 2018 | February 2019 | Percentage change |
Two-year fixed | 2.35% | 2.49% | +0.14% |
Three-year fixed | 2.56% | 2.66% | +0.10% |
Five-year fixed | 2.84% | 2.90% | +0.06% |
Two-year tracker | 1.98% | 2.10% | +0.12% |
A drop in mortgage rates is a good thing for consumers, but will prices continue to tumble throughout the year? In truth, this depends on a range of factors.
January's rate drop was likely influenced by each of the following things:
The tables below show the lowest introductory rates currently available on fixed-rate and tracker mortgages, at four popular LTV ratios.
While these tables offer an example of the rate you might be able to get, be aware that some mortgages have certain criteria you must fulfil - such as minimum or maximum loan amounts.
Source:Moneyfacts. 5 February 2019. *Halifax deal not available to first-time buyers. Lowest introductory rate for first-time buyers is 2.79% from Loughborough - 2.79%/5.34%/5.1%/£999.
Source:Moneyfacts. 5 February 2019. *Halifax deal only available to first-time buyers. Lowest introductory rate for home-movers is from Atom Bank - 1.94%/4%/3.7%/£1,200.
Choosing a mortgage isn't as simple as getting the best introductory rate you possibly can, as headline-grabbing rates don't always tell the full story.
Follow these tips when comparing mortgages: