Average two-year fixed mortgage falls below 6%

This is the first time the average two-year deal dropped below 6% since June 2023.

The average rate for a two-year fixed mortgage fell below 6% today for the first time since mid-June of this year – dropping to 5.99% according to Moneyfacts’ data.

This is some months behind the average five-year fixed deal, which dropped below 6.00% in September and currently sits at 5.60%.

“Having peaked at 6.86% in late July, rates have gently been falling since early August due to a combination of factors including falling inflation, base rate pauses and reductions in swap rates,” explained James Hyde, Spokesperson at Moneyfactscompare.co.uk.

“In recent weeks, a number of lenders have begun to offer sub-5% two-year fixed deals, with the lowest rates available UK-wide sitting around 4.75%”, Hyde went on to add.

With the Bank of England’s Monetary Policy Committee (MPC) meeting to vote on the base rate next week, a cut to the central interest rate or even a prolonging of the pause could see average mortgage rates continue to fall further.

Graph: The average rate for a two-year mortgage fell below 6% for the first time since June.

Mortgage rates were driven up earlier this year as the Bank of England’s MPC made consecutive hikes to the base rate in an attempt to quell chronically high inflation.

With inflation slowing dramatically to 4.6% in the year to October and the MPC holding the base rate at 5.25%, average mortgage rates have gradually been on the decline – an indication the market is improving.

A further positive sign, the mortgage market continues to see its highest product availability in over 15 years, with 5,766 deals available at the start of today.

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