Mortgage borrowers have reason to cheer as fixed rates continue to fall and lenders ease affordability rules, boosting hopes for more accessible lending – particularly for first-time buyers and remortgagers.
According to the latest Moneyfacts UK Mortgage Trends Treasury Report, average two- and five-year fixed mortgage rates dropped again in early July, continuing a steady downward trend. The average two-year fixed rate now stands at 5.09%, down from 5.95% a year ago, while the five-year equivalent has slipped to 5.08%, its lowest since October 2024.
Though modest on the surface – with month-on-month drops of just 0.03% (two-year) and 0.01% (five-year) – the cuts reflect a wider recalibration in the mortgage market. Lenders have also begun relaxing stress test rules, potentially improving affordability for borrowers at a time when incomes are under pressure.
The data also shows a broader positive shift. The average mortgage rate across the market dropped to 5.11%, down from 6.17% in July 2023. Meanwhile, product availability has surged, with 6,908 mortgage deals now on the market – one of the highest levels since 2007.
The average shelf-life of a mortgage product has fallen to just 16 days, the lowest since March 2025, suggesting strong competition among lenders to secure borrowers.
Rachel Springall, finance expert at Moneyfacts, said: “Fixed mortgage rates have continued on their downward trend, which will delight the millions of borrowers due to refinance this year. Lenders have also been relaxing their stress test rules, which will further boost affordability.”
For those who locked into two-year fixed rates at the peak last year, the difference is stark. In July 2023, the average two-year fix stood at 6.41%. Today’s 5.09% average equates to a £199 monthly saving on a £250,000 mortgage over 25 years.
The average standard variable rate (SVR) has also fallen slightly to 7.42%, down from a peak of 8.19% in late 2023.
Despite growing optimism, Springall warned that not all is smooth sailing. Average five-year fixed rates at 60% loan-to-value (LTV) actually rose last month, suggesting some divergence in lender strategies. Swap rate volatility could also fuel rate changes in the weeks ahead.
She added: “There needs to be more progress to support first-time buyers, who remain the lifeblood of the mortgage market, and to get mortgage prisoners switching deals.”
The Government’s Mortgage Guarantee Scheme is set to end this month, but with minimal impact expected on higher-LTV product availability. A replacement scheme is due to be announced shortly.
Lenders are also under pressure to go further – particularly on loan-to-income (LTI) caps – to help more buyers get on the ladder.
For now, though, the mortgage market is clearly in better shape than it was a year ago, offering greater choice, lower rates, and growing stability. Borrowers are being urged to seek independent advice to secure the best available deals in this improving – but still competitive – landscape.
