According to figures from Moneyfacts, average fixed mortgage rates on a two- and five-year term have decreased by 0.21% and 0.18% respectively to 5.56% and 5.2%.

The report found that the average two-year fixed rate is at its lowest level since February 2024 and the average five-year fixed rate is at its lowest level since March 2024.

Moneyfacts said that the average fixed mortgage rate on a two-year term is 0.36% higher than its five-year equivalent, adding that two-year fixed rates have been higher than their five-year equivalent since October 2022.

The average two-year tracker variable rate mortgage fell to 5.68% in September, which is down from 5.95% in August and a drop from 6.25% in the same period last year.

The average standard variable rate (SVR) came to 7.99%, which is a drop from 8.16% in August and 8.09% in September 2023.

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The highest SVR was recorded at 8.19% during November and December 2023.

Product choice fell slightly to 6,253 options in September from 6,657 in August, but is higher than the 5,338 recorded in September last year.

The average shelf life of a mortgage product increased to 21 days, which is a rise from 17 days in August 2024 and 15 days in September 2023.

 

Fixed mortgage rate cuts ‘welcome news for prospective borrowers’

Rachel Springall, finance expert at Moneyfacts, said that fixed mortgage rates have fallen across the spectrum, which was “welcome news for prospective borrowers”, and this was the second month of decreases.

She added that rates were “back down to levels not seen for over six months” and it can “take a few weeks for lenders to react to a volatile swap rate market, so it’s good to see mortgage pricing moving in a positive direction”.

Springall continued: “This month marks two years since the fiscal announcement took place, and subsequent unsettled times saw significant rises to mortgage rates. At the start of September 2022, the average two-year fixed mortgage rate stood at 4.24%; a year later, it was 6.7%.

“Fixed mortgage rates are now much lower than they were this time last year, but it remains the case that the average five-year average rate is lower than its two-year counterpart, which has been the case since October 2022.”

She noted that the base rate cut in August, the first in over four years, has led to “reductions in both the average two-year tracker rate and average SVR, but fixed rates remain lower on average”.

“Mortgage availability was impacted during August, as product choice felt its biggest month-on-month drop since February 2024, quite a contrast to the notable uplift in products seen during previous months.

“A deeper dive into the loan-to-value [LTV] sectors revealed the biggest drops were at 85% and 80% LTV of 27 and 25 deals respectively. A fall in choice in these areas may come as disappointing news to those borrowers with limited deposits or equity, but choice is more plentiful than a year ago. Those borrowers ready to switch their mortgage would be wise to seek independent advice to go over their options,” Springall said.