Mortgage interest rates hit a two-year low and more is to come

Mortgage interest rates have been falling steadily for the past seven weeks and are now at a two-year low, mortgage advice group De Hypotheker said on Friday.

And with the European Central Bank expected to cut rates by 0.25% this month, a further drop is likely, De Hypotheker said.

The average rate for a 10-year fixed mortgage with NHG protection is now 3.78%, compared with 4.04% two years ago. The 20-year fixed rate is now 4.11%, down from 4.27%.

Interest rates rose sharply in early 2022 after the Russian invasion of Ukraine, soaring energy prices and inflation. At its lowest, the 10-year fixed period for an NHG-protected property was just 1.11% and is now almost four times as high.

De Hypotheker’s own figures show that short-term fixed rent periods are increasing in popularity. “Many young buyers want to borrow the most they can in this overheated market and are going for a 10-year fixed period,” commercial director Mark de Rijke said.

Last month, land registry office Published figures indicating people are also taking advantage of increased borrowing potential for people buying a home with a bad energy label so that they can pay for improvements.

In the first six months of this year, almost 17% of mortgages for homes with an F or G label had a loan-to-value ratio of between 110% and 150%, the Kadaster said. But just 2% of homes with an A or B label involved mortgages of more than 110% of the property value.