Average price of two and five-year fixed-rate mortgages has fallen for the fourth consecutive month: Moneyfacts

The price of the average two and five-year fixed-rate mortgage is at a six-month low according to Moneyfacts.co.uk.

The average two-year fixed rate mortgage now stands at 5.32%, which is 0.32% more than its five-year fixed equivalent. The last time the average two-year fixed rate was this far above the five-year was February 2008.

Moneyfacts data also shows the average ‘revert to’ rate or standard variable rate has reached 7.12%, the highest price since April 2008.

Mortgage lenders focused on fixed rates

The momentum in the residential mortgage market is positive, as fixed rates have fallen and product choice has stabilised month-on-month.

Rate competition among banks and building societies has been more focused on longer-term fixed mortgages. 

Moneyfacts data shows the average five-year fixed rate at 90% and 95% loan-to-value fell to 4.99% and 5.33% respectively month-on-month, which is 0.16% and 0.13% lower compared to the start of October 2022. In the 40% deposit tier, the average five-year fixed rate has fallen by 0.18% from 4.94% to 4.76% over the same period.

Product choice also grew notably overall in the 40% deposit tier month-on-month, following a rise of 51 options to 657, now at its highest level on Moneyfacts records.

Aaron Strutt, product director at Trinity Financial, says: "The gap between the cost of the largest deposit and lowest deposit mortgages is surprisingly low particularly if you opt for a five-year fix. 

"The OBR forecasts said inflation in the UK would fall from 10.7% in the final quarter of last year to 2.9% by the end of 2023. This should mean mortgage rates get cheaper."

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The information contained within this article was correct at the time of publication but is subject to change.

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