Average Five-Year Mortgage Rate Hits A Two-Year Low

Some welcome news hit the headlines today: for the first time since May 2023, the average five-year fixed mortgage rate in the UK has fallen below 5%, landing at around 4.99%. Even more surprising, the average two-year fixed rate is now slightly lower at 4.97%, a reversal of the usual trend where shorter terms often came at a higher cost.

🔷 Why This Matters

👉 Improved Affordability
Just a year ago, many buyers faced rates well above 6%. The fall below 5% represents a meaningful improvement in affordability, particularly for those whose fixed terms are coming to an end.

👉 Confidence for Buyers
With borrowing costs easing, more buyers will feel confident about stepping into the market. That confidence helps drive activity, which is positive for everyone looking to buy or sell.

👉 More Choice on Deals
The unusual inversion, where two-year fixes are now cheaper than five-year fixes, gives buyers more flexibility. Whether you want short-term security or longer-term stability, there are increasingly competitive options available.

🔷A Boost For The Market

This drop in rates is more than just a number, it’s a signal that conditions for buyers are improving. Increased affordability means more households can realistically consider moving, re-mortgaging, or getting onto the ladder for the first time. That, in turn, supports a healthier, more active property market.

🔷 In Summary

The move to sub-5% mortgage rates is a positive development, particularly after the challenging highs of the last two years. For buyers, it could mean lower monthly repayments and more confidence to make their move. For the market as a whole, it’s a welcome step toward greater stability and momentum as we head further into 2025.

✨ If you’re thinking about making a move and want a clear picture of what you can afford, and what your monthly repayments could look like, why not speak to us? Our friendly, experienced in-house mortgage specialists are here to offer you a free, no-obligation consultation, giving you the confidence to take your next step with ease. Contact your local branch of Hannells today.

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