Average two- and five-year fixed mortgage rates fall below 6%

Average rates across two- and five-year fixed mortgages fell for a fifth consecutive month, and are now at their lowest in over six months, according to market data provider Moneyfacts.

The overall average rates for two- and five-year fixed deals have decreased to 5.93% and 5.55%, respectively. The last time both rates were below 6% was in June 2023. Notably, the average two-year fixed rate is now 38 basis points (bps) higher than its five-year counterpart.

The ‘revert to’ rate or standard variable rate (SVR) has seen a marginal dip of 1bps, settling at 8.18%, while the average two-year tracker variable mortgage rate has also decreased month-on-month, now at 6.15%.

The latest Moneyfacts UK Mortgage Trends Treasury Report also revealed a sixth consecutive increase in the number of mortgage products available, reaching an impressive 5,899 options — the highest level in over 15 years. The last time there were more deals available was in March 2008, when there were 6,192 available products.

Noteworthy is the surge in deals at the 95% loan-to-value (LTV) tier, reaching 270, the highest level since September 2022.

Furthermore, the average shelf-life of a mortgage product has extended to 21 days, marking the highest figure since June 2023.

“The consecutive reductions to the overall average two- and five-year fixed mortgage rates will be of great relief for borrowers looking to refinance this year,” Rachel Springall, finance expert at Moneyfacts, commented. “The volatility surrounding mortgage rate pricing eased, as the average mortgage shelf life rose from 17 days to 21 days, the highest figure recorded in over six months.

“There are big expectations for fixed mortgage rates to fall in the coming weeks, so some borrowers may choose to wait patiently for the right time to change their deal or buy their first home. Those comparing different mortgage offers may be pleased to see a big uplift in choice, as there was a rise of 200 residential mortgages month-on-month.”

Springall noted that while a rise in availability and cheaper mortgage rates are promising signs for those looking to refinance this year, those coming off either a two- or five-year fixed mortgage will be paying around 3% more on their mortgage.

“Despite this, it would be cheaper than reverting to a standard variable rate, which charge over 8% on average,” she pointed out. “Consumers would be wise to seek advice to assess the latest offers based on true cost and not be swayed by a headline grabbing rate.”

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