Mortgage charges have taken a dip since Wednesday’s better-than-expected inflation figures, making for extra “encouraging” news for debtors.

The UK inflation fee rose by 7.9 % within the 12 months to June 2023, down from 8.7 % in May, which may end in a less-aggressive rate of interest enhance from the Bank of England in August.

According to new figures from Moneyfactscompare.co.uk, common mortgage charges have fallen throughout each two and five-year fastened offers - and greater than 100 new residential mortgage merchandise have been made out there.

The common two-year fastened residential mortgage fee at this time is 6.79 %, down from a mean fee of 6.81 % on the earlier working day.

The common five-year fastened mortgage fee is 6.31 % at this time, down from 6.33 %, and there are at the moment 4,495 residential mortgage merchandise out there. This is up from a complete of 4,316 on the earlier working day.

Amanda Aumonier, head of mortgage operations at on-line mortgage dealer Better.co.uk, commented: "The recent fall in mortgage rates is encouraging for borrowers. The better-than-expected inflation figures give hope that the Bank of England may not aggressively raise interest rates as previously feared.

“This has resulted in a dip in two and five-year fixed mortgage rates, which is a positive sign for those looking to secure more affordable deals.”

However, Ms Aumonier noted: “It's important to keep in mind that not all lenders have followed suit, and some have continued to raise costs for homeowners, so it’s important to act now and consult with a mortgage broker to help navigate the market effectively.”

Myron Jobson, senior personal finance analyst, interactive investor, added that the better-than-expected inflation data for June has brought about a “palpable sense of optimism” in the mortgage marketplace following a “brutal” couple of months.

He said: “The spike in mortgage rates, to levels not seen since the financial crash, laid waste to housing affordability.”

Mr Jobson continued: “There has been a modest reprieve in mortgage rates, with the average rates on two and five-year fixed rate deals ticking lower by 0.03 percentage points to 6.79 percent and 6.31 percent respectively, and the number of residential mortgage products available increasing by 179 to 4,495 in the space of 24 hours.

“The decrease is modest, amounting to savings of around £3 a month based on a 75 percent loan-to-value fixed rate mortgage with a 30-year loan term on a £300,000 home. But it is a sign that mortgage rates are heading in the right direction.”

A slower inflation rate brings expectations of “lower-than-feared” interest rate hikes, which could pull the costs of fixed rate deals down further in the weeks and months to come.

Mr Jobson explained: “This is because the metrics used to price fixed-rate deals give lenders the green light to lower the cost of fixed-rate mortgages in anticipation of a future where borrowing costs will be reduced.”

Consecutive Bank of England Base Rate rises, now at 5 %, have been the principle contributor to hovering mortgage charges.

But whereas fastened fee offers could decrease, Mr Jobson famous there to be “no such reprieve” for the two.2 million owners on variable fee mortgages tied to the Base Rate, who will “feel the full brunt” of any anticipated Base Rate will increase.

Despite a slightly slower tempo of inflation, the Bank of England continues to be anticipated to extend the Base Rate once more subsequent month in a bid to carry inflation down additional to the Government-set goal of two %.

Therefore, Mr Jobson mentioned that variable fee mortgage holders “are likely” to face larger prices for a while to come back. He added: “For those seeking to buy or remortgage, it is worth consulting a mortgage adviser to explore your options.”

While fastened fee offers could also be decrease, Mr Jobson famous there to be “no such reprieve” for the two.2 million owners on variable fee mortgages tied to the Base Rate, who will “feel the full brunt” of any anticipated Base Rate will increase.