Fixed mortgage rates have recorded their biggest monthly reductions for almost two years, as lenders continued to pass on lower funding costs and expand product choice.
The latest Moneyfacts UK Mortgage Trends Treasury Report found the average two-year fixed rate fell by 0.16 percentage points during June to 5.52%, while the average 5-year fixed rate dropped by 0.11 percentage points to the same level. It marks the largest monthly reductions since October 2024 and leaves both averages at their lowest level since March this year.
Mortgage availability also improved for a third consecutive month, with product choice increasing by 45 deals to 7,177 products. Although still below the levels seen before April’s market disruption, almost three-quarters of the products withdrawn during that period have now returned.
Borrowers with smaller deposits also benefited from improving pricing. The average 5-year fixed rate at 95% loan-to-value fell below 6% for the first time since March, while product availability at 90% LTV rose above 900 options for the first time in four months.
The report also found that the average shelf-life of a mortgage product shortened slightly to 14 days from 15 days, suggesting lenders continue to actively reprice deals in response to changing swap rates.
Meanwhile, the average standard variable rate remained significantly higher at 7.13%, reinforcing the financial incentive for borrowers approaching the end of an existing fixed-rate deal to consider remortgaging.
“Borrowers will breathe a sigh of relief to see fixed mortgages falling.”
Rachel Springall, finance expert at Moneyfacts, said: “Borrowers will breathe a sigh of relief to see fixed mortgages falling at their fastest pace for almost two years, combined with a calmer period of product churn and an uplift in choice.
“Lenders responded positively to falling swap rates in June, seeing notable drops to the average two- and five-year fixed rates by 0.16% and 0.11% respectively, both settling at 5.52%.
“The last cuts of a similar scale came in October 2024, when the rates dropped by 0.16% and 0.13% respectively. It has been three months since fixed rates inverted, where the 2-year fixed has been higher than its 5-year counterpart.
“However, this has started to unwind, so the rates should hopefully start to fall back into a more traditional pricing structure. However, this positive trajectory could be thrown off course, as renewed escalation in geopolitical tensions could slow the tempo of mortgage rate cuts.”
