Sub-5% mortgage rates may come back to the market in the “next few weeks” as swap rates ease and markets bet that the Bank of England rate-raising cycle is coming to an end, says Rightmove.   

The average two-year fixed mortgage rate is 6.24%, 4 basis points lower than last week, according to the property website.  

While the average five-year fixed mortgage rate is 5.67%, a 2bps fall from a week ago.  

This comes as Sonia swap rates, which help set home loan rates, have continued to ease over the summer.  

The two-year swap rate is 5.262%, compared to 5.482 on 11 August, data from Chatham Financial shows. The five-year rate is 4.649%, against 4.853% over the same period.  

The BoE’s Monetary Policy Committee is expected to raise rates by 25 basis points from its current level of 5.25% after its meeting on 21 September, the day before official data is published.    

This would be the 15th rate rise in a row, taking it to the highest level for at least 15 years.    

This comes amid the Bank’s battle against inflation, which fell to 6.8% in the year to July from 7.9% in June, but still remains almost three-and-a-half times higher than its 2% target.    

But Rightmove mortgage expert Matt Smith says: “There’s a widely held view that the base rate is now nearing its peak which led to a fall in swap rates falling towards the end of last week, and this could mean we see lenders make more significant mortgage rate cuts in the next few weeks.   

“Swap rates have also responded reasonably positively to today’s unemployment figures and pay growth data.”  

Regular pay, excluding bonuses, rose by 7.8% from May to July compared with a year earlier — matching the pace of inflation over the same period, says the Office for National Statistics.  

At the same time, the headline unemployment rate in the May-to-July period was up to 4.3% for the first time in nearly two years, with the number out of work just below 1.5 million.  

But Smith says markets are confident that the pressure the BoE is putting the economy under will lessen towards the end of the year.  

The Rightmove expert adds: “All eyes will now look to the upcoming inflation figures, which are likely to have an impact on the next BoE Base Rate decision.   

“As long as the news is in line with market expectations, it’s possible that rate reductions will start to gather pace, and we could see sub-5% rates return to the market for the first time since the end of June.”    

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