Mortgage rates fall – Why that’s good news for first time buyers

The end of November 2022 has seen the five-year fixed mortgage rate fall below 6% for the first time in seven weeks, demonstrating that rates have stabilised since the Autumn Statement delivered by the Chancellor of the Exchequer, Jeremey Hunt on 17th November.

With new data finding that the struggle to renew or secure a new mortgage has started to ease, we’ve spoken to Justin Fear, Major Account Director at Meridian Mortgages, Specialist New Build Mortgage Advisers, to find out more about the latest mortgage rates and stability for the property market.

What is a fixed rate mortgage?

A fixed rate mortgage is a type of mortgage where the interest rate on your mortgage stays the same, for the duration of your deal. Given the ongoing news in the marketplace and current economic conditions, we’re seeing a real increase in buyers requesting the stability that a fixed rate mortgage can offer.

In previous years, the difference between a fixed and variable rate (a mortgage loan with the interest rate periodically adjusted based on the cost to the lender of borrowing on the credit markets) has been negligible, but the turbulence of the market meant that the gap between a fixed and variable mortgage rate was slightly larger, but what we’re now seeing is the fixed rate gradually going down again.

This is mostly because of the changes that have been made in the latest Autumn Budget, which has seen the market stabilised.

What does the mortgage rate falling mean for me?

The five-year fixed mortgage is currently at its lowest level in almost 2 months, which is really great news for both first time buyers, as well as current homeowners looking to re-mortgage. This marks a new step in the improvement of mortgage rates, with access to cheaper mortgage rates gradually opening up again.

Over the last week, we’ve seen a real increase in residential mortgage products available, with Mortgage Introducer finding that in just two days from 22nd to 24th November, there were effectively 3603 residential mortgage products, up from the 3540 that were available just two days before.

Having seen a drop in mortgage product availability at the end of September, this steady increase is positive for buyers wanting to secure a good mortgage rate, given that there are more options available which will cater to a variety of circumstances.

How will this benefit first time buyers?

In general, the downward trajectory of interest rates on mortgages will help first time buyers when it comes to affordability and monthly repayments. In terms of fixed rates, the stability of a fixed rate mortgage is something that is increasingly appealing to first time buyers. It provides people with a certainty of what their monthly costs will be and is a good security blanket to have clarity on exact outgoings.

Given the current marketplace, many first-time buyers are apprehensive to opt for a variable rate mortgage, simply because they are worried that a significant increase in interest rates will mean that they are not able to meet the monthly repayments. This is where we’re seeing lots of buyers, especially first time purchasers opting for a fixed rate, and the recent drop in the 5 year fixed rate is extremely promising for our customers.

For first time buyers, Shared Ownership represents a really good option when it comes to securing a mortgage. The option to purchase a share of a property and therefore secure a smaller mortgage can be a financial advantage.


Our affordable homes start from £86,250 for a 25% share, start your search now – find your new home