A milestone has been reached in the mortgage market as fixed-rate home loans, priced at less than 5%, make a comeback for the first time since June. This resurgence comes on the heels of major lenders announcing a fresh round of reductions in home loan interest rates.

Market observers are declaring the onset of a mortgage rate war, signalling a promising trend for both existing borrowers nearing the end of their current mortgage deals and prospective homebuyers who have been patiently waiting on the side lines.

Over the past few weeks, UK lenders have consistently trimmed their mortgage rates, with the latest days witnessing a flurry of rate cuts. Additional reductions are poised to kick in shortly, thanks to banks such as Halifax.

One notable development occurred when The Mortgage Works, a division of Nationwide Building Society, introduced a five-year fixed-rate mortgage deal priced at 4.99% on a recent Thursday. Brokers welcomed this offering as the first sub-5% fixed-rate deal they’ve seen in several months, marking a significant departure from the trend. It is believed that this is the first fixed-rate mortgage product priced below the 5% threshold since late June.

It’s important to clarify that the 4.99% product is designed for buy-to-let purposes, distinguishing it from standard residential mortgages. It is available to individuals seeking to borrow up to 55% of a property’s value. Ranald Mitchell, a director at the broker firm Charwin Private Clients, expressed optimism, stating, “Seeing rates starting with a 4 is a sight for sore eyes and could provide a stimulus to the market and borrower confidence.”

According to Moneyfacts, a leading financial data provider, the average interest rate for a new five-year fixed-rate mortgage deal has now reached 6.14%. Nevertheless, it is worth noting that highly competitive deals are available, significantly undercutting this average. For residential mortgages, the most attractively priced five-year fixed-rate deal on a particular Thursday was set at 5.12%.

Adding to the rate-cutting frenzy, Halifax has announced plans to slash interest rates by up to 0.5 percentage points on select fixed deals, with the changes taking effect from the following Friday. As a result, Halifax will offer five-year fixed-rate deals at a rate of 5.15%.

This turnaround in the mortgage market follows a period of steadily increasing mortgage costs. However, UK lenders began lowering their interest rates in the latter half of July, spurred by news that UK inflation had declined more significantly than anticipated in June.

The reappearance of fixed-rate mortgages below the 5% threshold and the ongoing trend of rate reductions signify an era of increased affordability and opportunity for homeowners and potential homebuyers in the UK. As lenders continue to vie for borrowers’ attention, now is an opportune time to explore mortgage options and secure attractive deals, benefiting both current homeowners and aspiring property purchasers.