HSBC and Halifax cut down mortgage prices, while other lenders decided to keep their deals unchanged

Two major UK lenders have announced cuts to the interest rates on select mortgage products despite the uncertainty ahead of the autumn budget.

The average rate for a two-year fixed mortgage rose to 4.69% this week from 4.59%, according to data from Uswitch. The average five-year fixed deal remained at 5.03%. Those are the average rates on a 75% loan-to-value (LTV) mortgage, meaning buyers need to have at least 25% for a deposit.

HSBC and Halifax cut down mortgage prices, while other lenders decided to keep their deals unchanged.

The mixture of moves on mortgage deals follows the Bank of England’s (BoE) decision to keep interest rates on hold at 4%. Traders are now eyeing a December rate cut, which would bring interest rates down to 3.75%.

Inflation data showed that the UK’s consumer price index (CPI) grew by 3.8% in the year to September, unchanged from July and August.

Meanwhile, the cost of low deposit mortgages has fallen to its lowest level in three years, as lenders cut rates and expand deals for borrowers with smaller deposits.

Data from the Moneyfacts UK Mortgage Trends Treasury Report show the average two-year fixed rate at 95% loan-to-value has dropped to 5.41%, its lowest since September 2022. The equivalent rate at 90% loan-to-value has fallen to 5.24%.

Across the wider market, the average two- and five-year fixed rates slipped by 0.04% and 0.01% respectively, to 4.94% and 5.01%. The Moneyfacts Average Mortgage Rate fell to 4.99%, down from 5.02% a month earlier and from 6.07% a year ago.

The two-year tracker rate edged down to 4.66%. The Standard Variable Rate held at 7.27%, below its 2023 peak of 8.19%.

The average shelf-life of a mortgage deal shortened to 21 days.

Product availability fell to 6,918, though the number of 95% loan-to-value deals rose to 465, the highest since March 2008.

Rachel Springall, finance expert at Moneyfacts, said: Borrowers with a limited deposit of just 5% or 10% will be thrilled to see the cost of a two-year fixed mortgage dip to a three-year low. The number of deals available to borrowers at 95% loan-to-value has also improved, with the pool of deals at its highest count since 2008.

She added: It may be a relief for borrowers to see fixed mortgage rates moving downwards once more. The Moneyfacts Average Mortgage Rate dipped below 5% and activity among lenders led to a drop in the average shelf-life of a deal to 21 days.