Two-year average mortgage rate below 5% for first time since Truss Budget: Moneyfacts
The average two-year fixed mortgage rate has dipped below 5% for the first time since former Prime Minister Liz Truss’s so-called mini-Budget, data from Moneyfacts shows.
The average two-year residential fixed rate hit 4.99% today, the first time it has fallen under 5% since 29 September 2022, when it was 4.87%.
A few days after the Truss mini-Budget on 15 September, there was a meltdown across UK financial markets that led to hikes in mortgage rates, a fall in the value of the pound, and the danger of widespread failure across the pensions industry and steep rises in the cost of UK government borrowing.
Moneyfacts head of news Adam French says: “Average two-year fixed mortgage rates dipping below 5% for the first time since the Liz Truss mini budget in 2022 is a symbolic turning point.
“While the cost of borrowing is still well above the rock-bottom rates of the years immediately preceding that fiscal event, this milestone shows lenders are competing more aggressively for business.”
Should you take a two-year or five-year fixed-rate mortgage?
More of our clients are taking two or three-year fixes rather than five-year fixes at the moment because of the price difference and also the general expectation that rates will be cheaper in two years' time. The governor of the Bank of England has been telling us the base rate will come down again, but not yet.
Some people take three-year fixes because they want a bit more payment security, while others take five-year fixes because they don’t want to remortgage every couple of years.
Nationwide for Intermediaries has one of the most competitively priced two-year fixes at just below 3.75%, its three-year fix is below 3.85% and its five-year fix is just over 3.90%. Applicants would need a 40% deposit to qualify for these rates and they have £1499 arrangement fees.
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The information contained within was correct at the time of publication but is subject to change.
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