Mortgage rates continue to fall as interest rate cut expectations ramp up, with Bank of England Governor Andrew Bailey’s more bullish recent comments marking a clear shift in tone.

This follows the Bank’s first rate reduction in four years on August 1st, when rates were lowered to 5% from a 16-year high of 5.25%.

Major lenders including HSBC, Halifax, NatWest and Barclays have responded by cutting mortgage rates further. While average two and five-year fixed rates remain above 5%, at 5.38% and 5.05% respectively, a number of sub-4% deals are available for those with a decent deposit. Swaps rates (the rates at which banks borrow money) however have increased by around 0.4% since mid-September and so some lenders have started increasing their rates.

The next Monetary Policy Committee (MPC) meeting is on November 7th and will be closely monitored. Ultimately, the decision will hinge on upcoming economic data, particularly inflation figures and labour market reports. Core inflation and services inflation both rose in August, but wage growth has slowed to 5.1%, its lowest level in over two years, although the war in the Middle East may well push up oil prices and business costs.

The money markets are now factoring in one more cut in 2024 in November, followed by several more in 2025, with the base rate finishing the year at 3.25%.

Below is a selection of this month’s best buys from Moneyfacts.co.uk:

Two-year fixed rates: 4.09% from first direct. Product fee £490. 60% LTV.
4.12% from Nationwide BS. Product fee £999. 60% LTV.

Three-year fixed rates: 4.09% from first direct. Product fee £490. 60% LTV.
4.14% from Nationwide BS. Product fee £999. 60% LTV.

Five-year fixed rates: 3.79% from first direct. Product fee £490. 60% LTV.
3.84% from Nationwide BS. Product fee £999. 60% LTV

Discounted variable: 4.49% For 2 years. From Progressive BS. Product fee £0. 75% LTV.
4.59% For 2 years. From Scottish BS. Product fee £995. 60% LTV.

BUY-TO-LET (BTL)

Best two-year fixed rate: 3.24% from The Mortgage Works. Arrangement 3.00% Advance. 65% LTV.

Five-year fixed rate: 3.69% from The Mortgage Works. Arrangement 3.00% Advance. 65% LTV

Best Discounted variable: 4.90% For 2 years. From Monmouthshire BS. Arrangement 2.00% Advance. 75% LTV.

The information we provide is our personal opinion and should not be relied upon for financial advice. Should you need financial advice or guidance please contact an appropriate professional.