Lenders have been individually cutting rates throughout July, announcing headline deals with rates below 4% for borrowers with plenty of equity.
But now the data is showing how much, on average, two- and five-year fixed rates have fallen in the last month. According to Moneyfacts.co.uk, they decreased by 0.18% and 0.15%.
Its latest report shows the average two-year fixed rate fell between the start of July and the beginning of August to 5.77%. Meanwhile, five-year fixed rates are now averaging 5.38%.
Two year fixes are still more expensive, by 0.39% on average, than the five-year options.
The average ‘revert to’ rate or Standard Variable Rate (SVR) fell to 8.16%, which is slightly less than the highest recorded (8.19%) during November and December 2023, said Moneyfacts.
But whilst mortgage rates have fallen, choice available and the time each product is on the shelves have both fallen. Moneyfacts said mortgage choice overall fell slightly month-on-month, to 6,657 options. Meanwhile the average time each mortgage is available has dropped from 30 days to 17 between July and August.
Rachel Springall, finance expert at Moneyfacts, said: “Lenders re-priced their deals with vigour during July due to falling swap rates, and the volatility within the mortgage market was made clear by the notable drop in the average shelf-life of a mortgage to just 17 days, down from 30 in June.
“There are expectations for rates to fall further in the weeks to come, particularly as the market reflects on the 0.25% base rate cut, the first cut in over four years.”
Springall said when it came to mortgage availability, the number on offer at 95% LTV – these are for borrowers with 5% deposits or equity – fell slightly by the start of August.
However, the biggest month-on-month drop within any LTV bracket was at 80% LTV, which fell by 53 products, dropping to the lowest level since March 2024.
“This may come as disappointing news to borrowers with a limited deposit or equity,” said Springall, “but choice could well bounce back in the coming months as lenders reassess their approach to lending at these higher LTV brackets.
“It is essential that borrowers move quickly to acquire a new deal if they are looking to refinance this year, or buy a property for the first time.
“Seeking advice from an independent broker is wise, particularly to keep abreast of the churn in products.
“The average Standard Variable Rate (SVR) is around 8% so the incentive to switch deals either to a fixed or tracker mortgage is clear.
“A variety of lenders priced their lowest rate deals even lower still over the past few weeks, leading to the return of sub-4% fixed rates towards the end of July, but borrowers must look beyond the initial rate and assess any mortgage based on the overall true cost.”
