New average two- and five-year fixed-rate mortgages have fallen below 6% for the first time in two months, according to financial data firm Moneyfacts. The typical two-year deal now stands at 5.99%, while the average five-year rate has dropped to 5.78%, down from a peak of 6.65% following September's mini-budget.
Rachel Springall of Moneyfacts said: "It appears lenders are slowly making reductions to their fixed pricing to adjust their positions, and in doing so, the overall average two and five-year fixed mortgage rates now sit below 6%." She added that rates could fall further as lenders aim to meet targets before the end of 2022.
The decline follows a period of volatility triggered by the mini-budget, which saw mortgage costs surge. However, markets stabilised after Chancellor Jeremy Hunt's Autumn Statement, easing uncertainty for lenders and borrowers. Despite the recent drop, rates remain significantly higher than a year ago, when the average two-year deal was 2.34%.
The number of mortgage products available has also recovered from a post-mini-budget slump, with 3,705 deals now on the market, though still below last year's levels. Borrowers coming to the end of fixed-rate deals or first-time buyers face much higher costs than previously anticipated.
Moneyfacts advises borrowers to seek independent advice and consider whether to lock in a deal now or wait for potential further reductions. The mortgage market remains volatile, and rates are influenced by the Bank of England's base rate decisions.
