US–Iran ceasefire has eased pricing pressure, yet rates are still about a percentage point higher than early March
Average fixed mortgage rates edged down on Wednesday afternoon, marking the first time both two- and five-year terms have fallen together since early March, according to Moneyfacts.
The average two-year fixed rate for residential borrowers slipped to 5.89% from 5.90% the previous day. The average five-year fix also eased, to 5.77% from 5.78%.
Buy-to-let pricing showed smaller moves. Moneyfacts recorded the average two-year BTL fixed rate at 5.46%, down from 5.47%, while the average five-year BTL rate held at 5.77%.
The modest improvement follows a two-week ceasefire agreement between Iran and the US, which helped calm some market volatility. Even so, Moneyfacts said it was premature to treat the change as a clear shift for borrowers, with swap rates — a key input to lenders’ pricing — still close to 4% after rising in recent weeks.
Fixed rates remain well above levels seen at the start of March, when average two- and five-year homeowner fixes stood at 4.83% and 4.95% respectively. Moneyfacts said the average two-year fix is now at its highest point since July 2024, while the average five-year fix is the highest since November 2023.
“Spring is meant to be a flourishing season for the mortgage market, especially for those looking to buy their first home,” said Rachel Springall (pictured right), finance expert at Moneyfacts. “Unfortunately, the mortgage mayhem caused by the unrest in the Middle East led to a flurry of rate hikes by lenders throughout March.
“Lenders also pulled deals from sale, some temporarily, but it led to an overall reduction of 17% in product choice within the space of a month.
“Swap rates are still hovering around 4% and really, we need more reassurances on inflation forecasts to give the market a better sense on whether (the Bank of England base rate) might be increased in the short-term.”
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