Last updated on 10 September by Claire Flynn

In this article

• What was the average mortgage rate in August?

• Are people choosing fixed or variable rate mortgages?

• What was the average mortgage loan amount in August?

• What was the average mortgage deposit in August?

• How much are people borrowing for their mortgage?

• Are people switching to a new lender when remortgaging?

• Is there a lot of demand from first-time buyers?

• An overview of the mortgage market in August

What was the average mortgage rate in August 2024?

The average fixed mortgage rate in August was 4.8%. This is compared to 5.9% in August last year, and 4.9% the previous month. The average fixed rate has dropped by 0.1 percentage points for two months in a row now, an indicator of mortgage rates falling generally.

There is significant year-on-year decline though. For someone with a £200,000 mortgage and a 25-year term, moving from a 6% rate to a 4.9% rate would save them £130 every month, or £1,560 a year. 

The below table highlights the average fixed rate for different deal lengths and different loan to value (LTV) ratios. This data is based on our analysis of the products available from five of the UK’s biggest mortgage lenders (Halifax, Santander, Nationwide, NatWest and HSBC), including both deals for new customers and product transfer options.

Mortgage rate trends in August

The Bank of England base rate was reduced from 5.25% to 5% on 1 August. Several lenders have reduced rates since this point, resulting in the slight month-on-month decline in average fixed rate.

This has led to increasing demand, suggesting falling mortgage rates are increasing confidence for those looking to buy a new home or those that are due to remortgage.

Looking forward, many will be wondering if mortgage rates will continue to drop. All eyes are now on the next Bank of England announcement on 19 September - if it is reduced again, we may see further rate falls.

Are more people taking out a fixed or variable rate mortgage?

In August, 97% of Mojo customers applied for a fixed-rate mortgage. The remaining 3% of applications were for tracker mortgages (a type of variable deal).

This percentage split was 95% fixed to 5% tracker in July - which means a slightly greater proportion of people are opting for fixed rate deals compared to last month, possible because of rate falls.

But if we look to August last year, the split was 85% fixed-rate mortgage versus 15% variable mortgages (14% were tracker deals and 1% were discount mortgages).

So why was there more interest in variable mortgages last year than now? Well, the average fixed-rate mortgage was higher last year than it is now, so it could be that more customers at that point were happier to consider a variable mortgage in the hope that the base rate fell.

Tracker mortgages can sometimes be more flexible than fixed-deals in regards to when you can remortgage without fees. Borrowers may have preferred opting for a flexible option rather than locking themselves into a higher fixed-rate deal.

Are people opting for two or five year fixed-rate mortgages?

In August, 52% of people went for two-year fixed-rate deals, while 37% went for five-year fixes. 6% went for three-year fixed-rate deals.

The previous month, 53% of Mojo customers opted for a two-year fixed-rate mortgage, while 33% went for a five-year fix. Another 7% went for 3-year fixed deals.

There's been a bit of jump in the proportion of customers choosing five-year fixed-rate mortgages month-on-month. This is likely due to fixed rates coming down - people may be more comfortable taking a longer deal. They may also want to take advantage of the lower rates now, in case they do start to increase again.

In August 2023, the proportion of customers who went for a two-year fix was similar at 50%. But there’s a noticeable drop in five-year fixes with just 26% of customers opting for them.

This is most likely due to the fact that rates hit a 15-year high last summer, making it people less keen to take out longer term fixes.

Learn more on how long to fix your mortgage rate for.

What was the average mortgage loan amount in July?

Based on our customers’ applications, the average mortgage loan amount in July 2024 was £186,080. This was slightly higher (-0.9%) than the previous month (£184,458). But it was 10.5%% higher than August last year (£168,356).

The significant increase year-on-year is likely due to a greater proportion of purchase customers (those buying a new property) in August 2024.

If we break out loan amounts by the type of customer, we can see that purchase customers tend to take out greater loans than remortgage customers:

• Purchase - £223,107

• Remortgage - £173,967

We break out the mortgage loan value by regions below.

Greater London has the greatest average mortgage loan amount of any region by quite a margin, which is perhaps unsurprising given that it tends to be one of the most expensive areas for property. 

What was the average mortgage deposit in August? 

17% of Mojo customers in August had a deposit of around 50%, enabling them to get a 50% loan-to-value mortgage. Another 14% had at least a deposit worth 40% of the property value.

This follows a similar pattern to the previous month, with 50% and 40% being the most common deposit amounts for Mojo customers in July. 

But this includes remortgage customers who tend to have higher deposits due to the equity they’ve built up in the property. 

If we look at those who purchased a new residential home in August, 28% got an 80% LTV mortgage, meaning they had a deposit of around 20%, while 21% of those customers had a larger deposit of 10%.

This is slightly different to last month in which 10% deposits were most common, followed by 20%.

Find out more about how much deposit you need to buy a house.

How much are people borrowing for their mortgage?

When people borrow for a mortgage, the amount they can borrow is usually capped at a certain multiplier of their income (usually around 4.5 times or a bit higher). But what loan to income ratio is most common?

In August, 17% of Mojo customers borrowed 1.5 times their annual income for their mortgage. A further 16% borrowed twice their income. In July, the most common loan to income ratios were three and 2.5 times the annual income.

But this includes remortgage customers who tend to need to borrow a bit less, with 20% of residential remortgage customers borrowing 1.5 times as much as their annual income in August.

Those who are buying a new home usually borrow a bit more, indicated by 16% of our residential purchase customers borrowing four times their annual income (this was also the most common loan to income bracket in July). A further 16% borrowed 3.5 times their income.

Read about the locations where first-time buyers need to borrow 15 times their annual income for a property.

When people remortgage, are they more likely to switch to a new lender or stay with their current one?

In August, 47% of Mojo’s reremortgage customers switched to a new lender. The other 53% opted to stay with their current lender (known as a product transfer). This is quite different to the previous month with just 36% of customers switching to a new lender. In July last year, just 31% of customers switched to a new lender.

A lot more people are choosing to remortgage to a different lender compared to previously. The most likely reason for this is that lenders are pricing their remortgage products more competitively for new customers. This means that an increasing number of people can get a better deal by switching lender.

During July and for much of the last year, product transfer options have often been the best deal available to a customer, meaning they were more likely to stay with their existing lender previously.

These pricing changes highlight why it’s important that borrowers look at options from across the market rather than just from their existing lender. They may miss out on a cheaper deal if they don't.

Speaking to a mortgage broker who looks at deals lots of lenders from across the market, like ourselves, can help you make sure you get find a deal that's right for you.

Are people borrowing additional money when they remortgage?

Out of our customers who remortgaged, only 12% borrowed additional money. 3% released money, but the vast majority opted for a like-for-like remortgage.

This trend is very similar to last month. However, there has been a slightly bigger shift year-on-year - in August 2023, just 8% opted for additional borrowing.

With rates higher at this time last year, this may have put people off taking out any extra money or loan than needed. Now that rates have fallen, it’s likely that homeowners have more confidence in borrowing more if they require the funds.

Find out about remortgaging for home improvements.

Is there a lot of demand from first-time buyers?

First-time buyers made up 51% of Mojo’s home buyer customers in August. This is compared to 53% the previous month.

The below table shows the proportional split of our first-time buyers across age bands, this month and last month.

The above age band split broadly falls in line with what’s expected, with most people buying their first home in their 20s or 30s.

Although this can vary significantly depending on the region and city, with people often being older by the time they buy in more expensive areas, such as London.

Learn more about the average age of first-time buyers with breakdowns by region.