Mortgage rates are “unlikely” to fall back to the low levels seen over the past decade, the chairman of one of the UK’s biggest lenders has said.

Charlie Nunn, chief executive of Lloyds Bank, told the BBC that while mortgage rates are expected to fall, they will not reach the near-zero rates they were in the 2010s.

Interest rates have risen sharply over the past two years as part of the Bank of England’s efforts to control runaway inflation in the United Kingdom. The base rate, which affects mortgages and other loans, as well as savings accounts, was raised to 5.25%, its highest level in 16 years, in August 2023.

This has seen transactions on standard variable rate mortgages rise to more than eight per cent by October 2023.

After a reduction in the base rate to five percent and a return to economic stability, mortgage rates have continued to fall ever since. The average for two-year fixed-rate deals is 5.36 percent, while a five-rate deal currently averages 5.05 percent, according to Moneyfactscompare.

Although the Bank of England is expected to continue cutting policy rates as inflation stabilises, homeowners should not expect a return to pre-retirement lows. cost of living crisis.

Asked on Sunday’s BBC show with Laura Kuenssberg whether “cheap” mortgage deals were ever going to come back, Mr Nunn replied: “We think they (mortgage rates) will continue to fall, but return to the level we saw over the last decade that interest rates fell to zero, I think that’s unlikely.”

He noted that although rising borrowing costs have been “really tough” for homeowners, only around 40% of UK properties have a mortgage.

He told the BBC: “Mortgage arrears, people struggling with their mortgages, have actually been falling again since December. »

He added that the average income of a family with a mortgage was £75,000, and so “many of these families have been able to absorb” higher repayments.

While many parts of the UK “continue to struggle” with the cost of living, Mr Nunn said 2024 marked “the turning point we’ve seen in the sense that most people in the country feel more financially secure.”

He said: “For most people the situation has improved a lot. There are more savings in deposit accounts, there are fewer people struggling with loans and business confidence is up. its highest level in nine years.”