The typical interest rate on a fixed mortgage of two years has fallen to the lowest point since the notorious mini budget in 2022.
According to the latest data from MoneyFacts, this is also showing that the average fixed rates of two years have fallen in more than six months in the past month in the past month.
The data only comes a few days after the Bank of England reduced interest rates by 0.25% to 4.25% And because mortgage lenders have started reducing prices with some of the best deals for borrowers with high shares that offer rates under 4%.
MoneyFacts revealed that the typical two -year mortgage with a fixed rate is currently 5.18% that has fallen by 0.14% last month. Last year this time a borrower would pay a two -year solution to pay an average of 5.91%.
Homeowners who take mortgages with a fixed rate of five years also receive considerably lower rates than last year. MoneyFacts said that the average 5.10% solution of five years in May was compared to 5.18% in April. In May 2024 it was 5.48%.
Are two years or five years of fixed rates cheaper?
If the mortgage prices are high, having a fixed rate of two years offers more flexibility, because, if prices fall, borrowers can go to a lower rate faster, remlorage instead of being locked in a long -term solution.
For this reason, two -year deals have been more expensive than five -year solutions.
Although it is still cheaper at the moment to switch off a fixed five-year rate than the two-year-old option can change this quickly.
Rachel Springall, finance expert at MoneyFacts, explained: “Falling exchange rates have been the driving force behind the mortgage reductions with a fixed rate and the movement has also shown a shortening gap between fixed rate prices in the short and longer term.
“The inversion of the rates could end quickly, with the interest roof between the average fixed mortgages of two and five years now only 0.08%.
“Since the beginning of October 2022, the average fixed rate of two years is higher than the five -year percentage. However, borrowers who are concerned about the rate volatility in the coming months can still prefer a fixed speed of five years to protect their rate longer, in particular because the total average rate is six months at the lowest point.”
Although rates are cheaper to be good news for borrowers, it is still a good idea to get advice to ensure that you choose the right mortgage for your circumstances.
Springall added: “Borrowers who are enthusiastic about the arrival of cheaper mortgage interest would be wise to seek advice to assess the total costs of each deal to ensure that this is the right choice for them.”