Average fixed mortgage rates fell at their fastest monthly pace in almost two years during July, as lenders responded to lower swap rates and continued to restore product choice, according to Moneyfacts.
The financial data provider said the average two-year fixed mortgage rate fell by 0.16 percentage points to 5.52%, while the average five-year fixed rate dropped by 0.11 points to the same level. Both are at their lowest since March.
The reductions represent the largest monthly falls since October 2024 and mark a third consecutive month in which two-year fixed rates have been priced above equivalent five-year deals, although the gap has begun to narrow.
The average rate on new mortgages also declined by 0.12 percentage points to 5.47%, while borrowers with a 5% deposit saw the average five-year fixed rate fall below 6% for the first time since March.
Mortgage availability continued to improve, with the number of products rising by 45 during the month to 7,177, extending the recovery from widespread product withdrawals earlier this year following market volatility.
Rachel Springall, finance expert at Moneyfacts, said borrowers would welcome the faster pace of rate cuts and improving product choice, but warned geopolitical uncertainty could yet slow the downward trend if it pushes funding costs higher.
She added that first-time buyers remain crucial to the health of the housing market and called on lenders to continue developing products that improve affordability as homeownership remains out of reach for many households.
