Mortgage Rates Fall Below 5%, “Now is the time to act” says Mortgage Advisor, RSC New Homes | Healthy Money Habits


As we enter the new year, positive movements within the mortgage market are giving buyers the reassurance that now is the right time to buy their next home.

Mortgage Rates On The Decline

Almost 50 lenders have now reduced their residential rates since 1st January, this week including four major banks - NatWest, HSBC, TSB and Metro Bank.

Despite a slightly higher rate of inflation announced at 4% (up from 3.9% the previous month), we’re still seeing rates fall below 5% from some of the big lenders in the market. 

One example is Virgin’s 2-year fixed rate (based on a 10% deposit), which was at 6.14% in August 2023, and now sits at 4.87% (as of 19.01.24), which is a reduction of 1.27% in circa 5 months. 

“A reduction of 1.27% in circa 5 months is a significant reduction when you’re talking mortgage payments. If anyone is sitting on the fence about reserving a new home because they’re waiting on further falling rates, I would say now is the time to act,” says Paul Machell, of RSC New Homes.

Fall in Rates With a 5% Deposit

There is also great news for first time buyers or those looking to buy with just 5% deposit, as the fixed rates for these have reduced for the first time since November, by up to 0.35% on a five year fixed rate.

Find out what rates are available to you

Reserve Now, Secure The Best Rate Later

In a fluctuating mortgage market, where many are holding out for even lower rates, the benefit of buying new is clear. When you reserve a new build home and secure a mortgage rate 6 months before you’re due to move, your advisor can work to negotiate a better deal with the same lender if mortgage rates have fallen further since you applied. 

“Reassure customers that now is the time to act. If rates do decrease before completion, we would look at reviewing it and getting them on a lower rate,” assures Paul. 

We also have access to two expert whole of market mortgage advisors, who can find you the most competitive and exclusive deals available to suit you. And when you reserve a Strata home and use one of our recommended mortgage advisors, their service is completely free (typically worth min. £399).

Find a home near you

How To Make Mortgage Payments Manageable

Paul says “In 2023 the market saw a 13% uplift in people taking out a mortgage with a term of 30 years+. We know that this has been down to [previous] rising mortgage rates, which lead to higher mortgage payments. Whilst we have seen rates slowly start to fall over recent months, affordability is still quite tight mainly because of rising living costs and rising property prices.”

Opting to fix a 2 or 5 year mortgage rate now, over a term of 30 years or more, could help to keep current mortgage payments manageable. Your mortgage term can change every time you remortgage at the end of a fixed rate deal. 

When the time comes to remortgage and fix your rate for the next 2 to 5 years, you might find that rates have reduced even further and you can shorten the term and keep repayments around the same amount. Or you may choose to keep the term longer and see the benefit of lower monthly payments; it’s whatever works better for you at the time.

See What Rates Are Available To You

We have partnered with RSC New Homes, one of our recommended independent mortgage advisors, to enable you to find the best mortgage rates from the main lenders in the market, in just 60 seconds.

This free tool is quick and easy to use, offering you tailored results based on your own financial criteria. A soft credit search will be carried out, which does not impact your credit score, but it allows mortgage lenders to offer you a pre-approved decision in principle, in real time.

Use our free Mortgage Calculator