UK Mortgage Rates Dip Below 5% for First Time Since 2022
Two-Year Mortgage Rates Drop Below 5%: A Key Opportunity for Borrowers
After years of volatility and rising costs, mortgage rates are finally showing signs of relief. The average two-year fixed deal has now dropped below 5%; a milestone that hasn’t been seen since 2022. For homeowners coming to the end of their fixed terms, and for first-time buyers wondering if now is the right time, this shift could open the door to opportunity.
What's happening? Let's break it down
- The average two-year fixed mortgage rate has fallen to 4.99%, marking the first time it has dipped below 5% since the mini-budget triggered a spike in borrowing costs in September 2022. This change signals growing competition among lenders.
- For the first time in years, two-year rates are now slightly cheaper than five-year fixes, reflecting renewed market expectations of near-term interest rate cuts.
- The Bank of England recently lowered the base rate to 4%, its fifth cut since last year, making borrowing less expensive, especially for those with tracker mortgages.
Why it matters to you
Shorter fixes are back in favour
Two-year deals under 5% are now more attractive than longer-term options in a shift back toward historical norms. However, it's still important to talk to an adviser to find the best option and term for your specific circumstances.
Expiring mortgages = time to act
With many fixed-rate mortgages ending in the second half of 2025, borrowers could lock in lower payments now rather than wait.
Lower rates, but not sharply falling
Despite the rate cut, inflation forecasts suggest further reductions may be slow.
Lenders are racing to compete
Banks are slicing margins to attract new customers, meaning better offers could emerge soon.
What you should do now
- If your fixed deal expires soon, now’s a great time to
remortgage. Two-year fixes offer better affordability than longer terms.
- If you're on a tracker or SVR deal, transitioning to a fixed rate could protect you from future rate hikes while rates are still falling.
- First-time buyers: This dip is particularly relevant—current two-year rates around 4.99% are historically competitive.
Need help weighing your options?
A mortgage broker (like the team at Motion Mortgages) can help you compare rates, match them to your plans, and act quickly. Whether you're re-mortgaging, moving home or a first time buyer, expert advice can help you seize this rare window. Contact Motion Mortgages today to explore your options.
