The average two-year fixed mortgage rate has dropped month-on-month by the biggest margin in over six months, the latest Moneyfacts UK Mortgage Trends Treasury Report data has revealed.
The average two-year fixed mortgage rate has fallen to its lowest point since the start of September 2022, before the ‘mini-Budget’. The availability of product choice grew further, and the average shelf-life of a deal fell.
Average mortgage rates on the overall two- and five-year fixed rates fell by 0.14% and 0.08% to 5.18% and 5.10% respectively. The two-year fixed rate noted its biggest monthly fall since the start of October 2024 (0.16%).
The average two- and five-year fixed rates were last lower in September 2022 (4.24%) and November 2024 (5.09%) respectively.
At the start of May 2024, the average five-year fixed rate was 5.48%; compared to the start of this month, the rate is 0.38% lower at 5.10%. However, the average two-year fixed rate has fallen by 0.73% over the same period, down from 5.91% to 5.18%.
The average two-year fixed rate is 0.08% higher than the five-year equivalent but this is the lowest the gap has been since rates became inverted in October 2022.
The average shelf-life of a mortgage product fell to 19 days, from 21 days a month ago.
Product choice overall rose month-on-month, to 6,993 options, which is up year-on-year (6,565 – May 2024) and the highest number since October 2007 (7,421).
The average two-year tracker variable mortgage rate fell to 5.16%, while the average ‘revert to’ rate or Standard Variable Rate (SVR) dropped to 7.58%. In comparison, the highest recorded was 8.19% during November and December 2023.
| Mortgage market analysis | ||||||
| May-23 | May-24 | Nov-24 | Apr-25 | May-25 | ||
| Fixed and variable rate products | Total product count – all LTVs | 5,264 | 6,565 | 6,402 | 6,870 | 6,993 |
| Product count – 95% LTV | 212 | 347 | 358 | 442 | 462 | |
| Product count – 90% LTV | 675 | 791 | 748 | 845 | 876 | |
| Product count – 60% LTV | 676 | 748 | 758 | 797 | 786 | |
| All products | Shelf-life (days) | 25 | 28 | 17 | 21 | 19 |
| All LTVs | Average two-year fixed rate | 5.26% | 5.91% | 5.39% | 5.32% | 5.18% |
| Average five-year fixed rate | 4.97% | 5.48% | 5.09% | 5.18% | 5.10% | |
| 95% LTV | Average two-year fixed rate | 5.94% | 6.14% | 5.83% | 5.81% | 5.63% |
| Average five-year fixed rate | 5.28% | 5.64% | 5.40% | 5.62% | 5.58% | |
| 90% LTV | Average two-year fixed rate | 5.50% | 6.12% | 5.70% | 5.59% | 5.42% |
| Average five-year fixed rate | 5.08% | 5.57% | 5.24% | 5.33% | 5.24% | |
| 60% LTV | Average two-year fixed rate | 4.83% | 5.45% | 4.86% | 4.79% | 4.65% |
| Average five-year fixed rate | 4.57% | 5.08% | 4.66% | 4.69% | 4.58% | |
| All LTVs | Standard Variable Rate (SVR) | 7.37% | 8.18% | 7.95% | 7.60% | 7.58% |
| All LTVs | Average two-year tracker rate | 5.07% | 6.12% | 5.71% | 5.20% | 5.16% |
| Data shown is as at the first available day of the month, unless stated otherwise. | ||||||
| Source: Moneyfacts Treasury Reports | ||||||
Rachel Springall, finance commentator at Moneyfacts, said: “The momentum of rate cutting was rife throughout April, with lenders rushing to tweak their mortgage ranges, leading to a drop in the average shelf-life of a mortgage to 19 days, down from 21 a month prior. Such vigorous activity led to notable cuts to the overall average two- and five-year fixed mortgage rates, seeing the biggest monthly fall to the two-year fixed rate in over six months. Borrowers looking for a new deal may also be pleased to see the average two-year fixed rate has reached a notable milestone, falling to its lowest point recorded since the start of September 2022, before the notorious ‘mini-Budget’, or fiscal announcement.
“Falling swap rates have been the driving force behind fixed rate mortgage cuts, and the movement has also fuelled a shortening gap between short- and longer-term fixed rate pricing. The inversion in rates could soon come to an end, with the rate gap between the average two- and five-year fixed mortgages now just 0.08%. Since the start of October 2022, the average two-year fixed rate has been higher than the five-year rate. However, borrowers who are worried about rate volatility in the months to come may still prefer a five-year fixed rate deal to secure their rate for longer, particularly as the overall average rate is at its lowest point for six months. There is more positive news for borrowers with smaller deposits, with the average two-year fixed mortgage at 90% loan-to-value dropping to its lowest point since October 2022 (5.33%) and product choice overall at 90% and 95% loan-to-value remains at a 17-year high (March 2008).
“Product choice continues to thrive, and this can create a positive outlook among borrowers. There will be millions of consumers coming off low fixed rate mortgages over the next year and they need both the support and appetite for new business from lenders to secure new deals. First-time buyers remain an integral part of the mortgage market, so any relief on stress testing or innovative products can make a huge difference to those struggling to find an affordable home. Borrowers excited by the arrival of cheaper mortgage rates would be wise to seek advice to assess the overall cost of any deal to ensure it’s the right choice for them.”
