The average two year fixed-rate mortgage is now 5.93% according to data released today by Moneyfacts.co.uk. Meanwhile, the average five-year fixed rate is 5.55%.
To put this into context, in December the average two-year rate was 6.04% and in July it was 6.39%. In fact, said Moneyfacts, you would need to go back to June to see the average two-year fixed rate below 6%.
For borrowers this is mixed news. Anyone who remortgages to a new deal will find their new rate will be more expensive. Indeed, two years ago when many would have fixed into their current deal, average rates were between 2% and 3%.
On the other hand, it will be cheaper to remortgage now than it was in the second half of 2023. What’s more, it would seem there are also more deals available for borrowers to choose from.
Moneyfacts said the number of mortgage options for borrowers has risen by over 200 products month-on-month and the average shelf life of a mortgage deal has risen to 21 days.
This means that when lenders release new deals, the window in which borrowers can take advantage is longer.
Rachel Springall, finance expert at Moneyfacts, said the five months of consecutive reductions to the overall average two- and five-year fixed mortgage rates will come as a great relief for borrowers looking to refinance this year.
“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, she said.
“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.”
If you are coming to the end of your current mortgage deal and do decide to wait it out, it’s worth finding out your lender’s standard variable rate (SVR). This is the ‘revert rate’ which you will automatically be assigned if you don’t remortgage. You will pay this rate until you switch to another product.
Springall said you will be likely to pay around 8% on an SVR at the moment. As such it’s a good idea to get advice from a broker about your next move.
For those who are looking at rates with a view to buying a home, today’s data will come as positive news.
Springall said: “Borrowers with a limited deposit or equity, such as first-time buyers, are benefiting from an increase in product choice and lower mortgage rates.
“The availability of deals at the 95% loan-to-value tier (270) has increased to the highest level since September 2022 (274) and the average two- and five-year fixed rates at this tier are at their lowest since June 2023.
“However, if borrowers can stretch their deposit to 10% then they will find greater choice and cheaper rates. 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.”
