Average two-year fix dips below five-year rate: Moneyfacts

The average two-year fixed mortgage rate has dropped below its five-year counterpart for the first time since September 2022, according to the latest Moneyfacts data.

The figures show that the average two-year fix is now 5.00% across all LTV bands, just below the five-year equivalent of 5.01%.

Last week, Rightmove’s mortgage tracker showed that the average two-year fixed mortgage rate was level with the average five-year fix for the first time since September 2022.

Rachel Springall, finance expert at Moneyfactscompare, said: “Millions of borrowers coming off a fixed rate deal this year will be delighted to see fixed mortgage rates on the downward trend, with the average two-year fixed rate dipping below its five-year counterpart for the first time since September 2022. Back then, mortgage rates started to rise dramatically, in the aftermath of the ‘mini-Budget’ and it caused mass panic for those struggling to buy their first home. Thankfully, time is a healer, with lower rates, much more market stability and a relaxation in stress testing, mortgage prisoners might now be free to refinance. 

“The end of the inversion in the two and five-year fixed rates, if sustained moving onward, will bring borrowers back to a more traditional mortgage market, where it’s more expensive to secure a longer-term fixed mortgage. Lenders will no doubt be keeping a close eye on swap rates and react quickly should the path change in the coming weeks. This may well be the time for borrowers to act quickly to secure a deal, so it’s wise for them to seek advice to navigate the mortgage maze.”