Mortgage rates in the UK have continued their gradual decline with lenders also easing stress testing criteria and expanding product availability, according to the latest Moneyfacts UK Mortgage Trends Treasury Report.

The average 2-year fixed rate dropped by 0.03% to 5.09% while the 5-year equivalent edged down by 0.01% to 5.08%.

This marks the narrowest gap between the two rates since October 2022, when the market saw a significant inversion.

RATE REDUCTIONS

Rate reductions have been particularly notable over the past 12 months. The average 2-year fix has fallen from 5.95% in July 2024 while the 5-year rate has dropped from 5.53% over the same period. The current average mortgage rate now sits at 5.11%, down from 5.80% a year ago and significantly lower than the peak of 6.17% in July 2023.

Alongside falling rates, lenders are also responding to increased demand by relaxing affordability stress tests.

The number of mortgage products available rose to 6,908 – the highest level outside of a brief peak in May and the most since October 2007.

However, the pace of change remains brisk with the average shelf-life of a mortgage deal is now just 16 days, down from 17 last month and the shortest since March 2025.

AFFORDABILITY BOOST

Rachel Springall, finance expert at Moneyfacts, said: “Fixed mortgage rates have continued on their downward trend, which will delight the millions of borrowers due to refinance this year.

“Lenders have also been relaxing their stress test rules, which will further boost affordability.”

She added that while improvements in rates and product choice were encouraging, more needed to be done to support first-time buyers and mortgage prisoners. With no movement yet on loan-to-income (LTI) caps, affordability remains a key barrier for many.