Mortgage rates have fallen at their fastest pace for almost two years, providing a welcome boost for buyers and homeowners as lenders continue to cut the cost of borrowing.
The latest Moneyfacts UK Mortgage Trends Treasury Report found the average 2-year fixed mortgage 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. Both now stand at their lowest level since March 2026.
The report also points to improving choice for borrowers, with the number of mortgage products rising for a third consecutive month to 7,177 deals. Borrowers with smaller deposits have also benefited, with the average five-year fixed rate at 95% loan-to-value falling below 6% for the first time since March.
Although lenders continue to reprice products in response to changing market conditions, the pace of withdrawals has eased significantly compared with earlier this year, offering greater stability for buyers looking to secure a mortgage.
POTENTIAL SAVINGS
The average standard variable rate remains much higher at 7.13%, underlining the potential savings available for homeowners reaching the end of an existing fixed-rate deal.
Rachel Springall, Finance Expert at Moneyfacts, says: “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, with both the average 2-year and 5-year fixed rates falling to 5.52%.
“Mortgage product choice has continued to recover following the sharp withdrawals seen earlier this year, while borrowers with smaller deposits are also benefiting from improving availability. However, there is still room for improvement, particularly for those able to put down just a 5% deposit.
“Mortgage costs are not expected to rise sharply in the near term, but affordability remains a challenge.
“It remains vital that lenders continue to innovate and carefully relax criteria to support first-time buyers, while anyone looking for a mortgage should seek advice to ensure they choose the right deal rather than simply the lowest headline rate.”
FLEXIBILITY BOOST
Nathan Emerson, CEO at Propertymark, says: “Any fall in mortgage rates should help boost flexibility for both buyers and sellers, and it could perhaps be a sign that the UK housing market is overcoming what may be the worst of the mortgage rate rises witnessed in recent years.
“However, with inflation figures due next week, all eyes will likely turn to the Bank of England and its next base rate decision at the end of the month.
“There has been speculation that we may see a rate rise over the coming months, which could shift sentiment among lenders as the year progresses.
“Also, the appointment of a new Prime Minister could create uncertainty among buyers and sellers due to potential changes in housing policy going forward.
“So, while this news is welcome, it is important to consider the wider economic picture and the many different scenarios that could play out over the coming weeks and months.”
