Homeowners coming to the end of a fixed mortgage deal are finally getting some good news. For the first time in nearly three years, the average two-year fixed mortgage rate has slipped below five per cent.

According to industry data, the average two-year fix now stands at 4.99 per cent, compared with 5 per cent for a typical five-year deal. It marks a dramatic turnaround from the turbulence of recent years, when rates spiked above six per cent in the aftermath of Liz Truss’s 2022 mini-Budget and again during the inflation surge of 2023¹.

For borrowers, the impact is clear. Someone remortgaging a £200,000 loan over 25 years could now be looking at monthly payments of around £1,167 – hundreds less than the sums being quoted at last year’s peak.

The Bank of England’s decision to cut the base rate to 4.0 per cent earlier this month has helped to ease borrowing costs². At the same time, competition among lenders has intensified, with many banks lowering rates to attract remortgage business after a quieter start to the year.

The result is that deals once thought unthinkable are now back on the table. Borrowers with strong equity are seeing two-year fixed rates well below four per cent. For example, Santander is offering a 3.78 per cent two-year fix for homeowners with at least 40 per cent equity. Buyers with a 15 per cent deposit can secure a 3.94 per cent two-year fix from Yorkshire Building Society³.

If your current deal is ending soon, the market looks far more positive than it did a year ago. Rates remain higher than the record lows of the late 2010s, but they have fallen steadily from the 2023 highs.

Choosing the right deal is about more than the headline number, however. Borrowers must weigh up:

• Two-year fixes: greater flexibility if rates keep falling, but you may face arrangement fees again sooner.
• Five-year fixes: longer security against future rises, though you might miss out if rates continue to drop.
• Three-year fixes: increasingly available, striking a balance between short-term freedom and medium-term certainty.
• Trackers: these follow the Bank of England’s base rate plus a margin and can offer flexibility, but repayments could rise again if rates move upwards.

The mortgage market has been through a period of volatility, but the signs now point towards greater stability and more competitive pricing. For many families, this represents an opportunity to reduce monthly costs and plan with more confidence.

If your fixed rate is due to end within the next six months, now is the right time to review your options. Speak to us and we can help you understand how the latest changes in the mortgage market could affect your repayments.