Fixed-rate mortgages have fallen to their lowest level since May 2023, according to new data, showing borrowers are also benefiting from greater product choice.
Mortgage customers signing up for new deals can expect a typical rate of 5.40% on a two-year fixed rate deal – this is 0.16% lower than a month ago, according to Moneyfacts data.
Meanwhile, the average five-year fixed rate now stands at 5.07%, after falling 0.13% in the past month.
According to Moneyfacts, fixed interest rates have fallen to the lowest level since spring 2023. Borrowers deciding between a solution for two or five years will notice a typical difference of 0.33% between the two when comparing rates as part of their assessment.
But the fact that there are more products available and these products are offered on the market for longer is the most promising.
Rachel Springall, financial expert at Moneyfacts, said: “Mortgage product choice has recovered after two months of declines, which is an encouraging sign for the market.
“Lenders continued to cut fixed mortgage rates, but there was a much quieter rotation of products as the average life of a mortgage remained 21 days.
“These steps demonstrate lenders’ promising stance to attract new customers, which could become even more urgent as we get closer to one of their year-end targets.”
The data comes just days after brokers warned borrowers The era of price cuts is in danger of coming to an end as some lenders started to implement interest rate increases.
Springall echoed the advice of these experts that anyone about to take out a mortgage should seek advice and be vigilant of price movements.
“Falling swap rates over the past month have encouraged lenders to cut rates,” she said, “but a combination of the looming budget, inflation concerns and other global influences could result in uncertainty about market prices.
“However, the Bank of England base rate is still expected to fall further before the year is out.”
She added: “All eyes will be on the current Budget and the next base rate decision day for borrowers, but in the meantime it would be wise for them to seek independent advice to explore the latest options.
“Lenders will undoubtedly keep a close eye on the markets, allowing them to react suddenly to changes. As a result, as we have seen in the past, some deals may close as lenders try to assess their current margins.”