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The mini budget that was announced last autumn resulted in chaos in the bond market, causing a sharp increase in the cost of borrowing, which directly hit fixed mortgage rates. There was uncertainty as to how long it would take for rates to fall, but most brokers and market experts expected them to settle somewhere between 4% and 5% during 2022.
However, at the start of February, we saw the first five-year fixed mortgages go below 4% as HSBC and Virgin Money released rates at 3.99% and 3.95% respectively. This led to declarations of a ‘mortgage rates war’ from property commentators as lenders fight to attract customers.
Now Platform, which is part of The Co-operative Bank, has announced five-year fixed rates starting at 3.75% from Monday 20 February. Mortgage market watchers are now asking whether rates will continue to drop and fall back below 3.5% on five-year fixes.
A mortgage technical manager said, “Platform has a history of unsettling the bigger banks in the market. Platform had one of the lowest five-year fixed rates in the market in October 2021, at 0.79%. Platform’s pricing hasn’t only laid down the gauntlet on five-year fixed pricing but also their two-year fixed rates hovering above 4% also provide an interesting proposition for homeowners, who may have felt that longer-term fixed rates were their only option for a decent rate.