Average two- and five-year fixes drop below 5% as lenders step up high LTV support
Average two- and five-year fixed mortgage rates have fallen to their lowest levels since early September 2022, before the government’s mini-Budget, according to the new figures from Moneyfacts.
The price comparison site’s latest UK Mortgage Trends Treasury Report shows that the typical two-year fixed rate dropped by 0.08 percentage points over the month to 4.86%, while the average five-year fixed rate fell by 0.10 percentage points to 4.91%. The five-year fix has now moved below 5% for the first time since May 2023.
Across all residential products, the Moneyfacts Average Mortgage Rate declined to 4.91% in the month, from 4.99%. This is 0.53 percentage points lower than the 5.44% average recorded in December 2024.
Product choice has also broadened. The number of residential mortgage products rose to 7,054, close to a record high, with the average shelf-life of a mortgage deal shortening to 18 days, reflecting stronger pricing activity and repricing by lenders.
The expansion has been most pronounced at higher loan-to-value (LTV) bands. Over the past 12 months, the number of products at 95% LTV has increased by 111, and by 155 at 90% LTV. No other LTV tier has seen growth of more than 100 products year-on-year. Moneyfacts said the 90% and 95% LTV ranges are now at their highest levels since March 2008.
Tracker and revert-to rates have been more stable. The average two-year tracker variable rate was unchanged month-on-month at 4.66%, though this is 0.80 percentage points lower than the 5.46% average seen a year earlier. The average standard variable rate (SVR) – the “revert to” rate – held at 7.27% on the month, down from 7.85% a year ago and below the recent peak of 8.19% reached in November and December 2023.
“Mortgage rates continue on the downward trend and November was particularly fruitful for fixed rate cuts,” said Rachel Springall (pictured right), finance expert at Moneyfacts. “The repricing by lenders led to the average five-year fixed rate dropping below 5% for the first time in over two years and sits at its lowest point since before the ‘mini-Budget’ in September 2022, alongside its two-year counterpart.
“The government has been very vocal that it wants lenders to do more to support buyers to boost UK growth, so any improvement in high loan-to-value deals should be celebrated as it gives borrowers more choice as competition ramps up.”
For Springall, the improvement in cost and product availability of mortgages paints a positive picture for borrowers as we edge towards the New Year.
“This year has not been without a few ups and downs for rate moves and product availability, but all signs are looking encouraging for the mortgage market to thrive moving into 2026,” she said. “The Budget has been and gone, expectations for another base rate cut are high, and muted house price growth as a combination can lead to optimistic sentiment among buyers.
“However, those who locked into a cheap fixed deal five years ago will need to accept that they will have to cover higher repayments, with the Bank of England expecting 3.9 million households will refinance onto higher rates over the next three years. Seeking advice in the first instance before buying or remortgaging will be essential to help borrowers navigate the mortgage maze.”
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