Average two-year fixed mortgage rates have fallen below 5% for the first time since the turbulence following Liz Truss’s mini-budget in September 2022. According to Moneyfacts, the current average stands at 4.99%, marking what it calls a “symbolic turning point” for borrowers and signalling fiercer competition among lenders. Although the Bank of England has cut interest rates five times since last August, a recent split vote among policymakers has cast doubt on further reductions this year.

Moneyfacts noted that while mortgage rates are moving in line with the Bank’s cuts, significant further drops are unlikely. Around 1.6 million fixed-rate deals are due to expire in 2025, with 900,000 of those in the second half of the year. Rates remain well above the historically low levels seen before the mini-budget, which triggered market turmoil and drove mortgage costs to their highest since the 2008 financial crisis.

Knight Frank Finance described the current mortgage market as “ultra-competitive,” with the best deals now around 3.7%. While uncertainty remains, they expect rates to drift lower through the autumn. However, with inflation forecast to peak at 4% in September before easing, the Bank of England may keep its base rate at 4% for some time.

House prices rose slightly in July, with Halifax reporting an average of £298,237. Improved affordability, rising wages, and more flexible lending criteria are helping to support steady growth in the housing market.