The mortgage market is changing, and there’s some good news for those looking to buy a home or remortgage. According to the latest data from Moneyfacts UK Mortgage Trends Treasury Report, average fixed mortgage rates across all loan-to-value (LTV) tiers for both two- and five-year fixed-rate deals have been on a downward trend for the past four months.

Current Rates

As of the start of December, the average rates for two- and five-year fixed mortgages have fallen to 6.04% and 5.65% respectively. These are the lowest levels we’ve seen since June 2023. Interestingly, the gap between the average rates for two-year and five-year fixed mortgages has narrowed, with the two-year rate now only 0.39% higher than its five-year counterpart.

Stable Standard Variable Rates

Despite these changes, the average ‘revert to’ rate, also known as the Standard Variable Rate (SVR), has remained stable at 8.19%. This is the highest level recorded by Moneyfacts since they began electronic records in July 2007.

Tracker Rates and Product Choices

On another note, the average two-year tracker variable mortgage rate has slightly increased, now standing at 6.16%. However, the overall number of mortgage options available to borrowers has risen for the fifth consecutive month, reaching a whopping 5,694 choices – the highest in over 15 years.

Mortgage Market Analysis

Let’s delve into the specifics. Over the past year, the mortgage market has seen significant fluctuations:

• Product Availability: There’s been a notable increase in the number of mortgage products available, especially in the 90% and 95% LTV tiers, providing more options for first-time buyers and those with smaller deposits.
• Fixed Rates: The average two-year and five-year fixed rates have seen ups and downs, but the current trend is a decrease, offering more affordable options for borrowers.
• Standard Variable Rates: These rates have seen a steady increase over the year, emphasising the potential benefits of fixed-rate mortgages.

Expert Insights

Rachel Springall, a Finance Analyst at Moneyfacts, highlights the positive implications of these trends. She notes that the drop in fixed mortgage rates across all LTVs is a welcome development, particularly for first-time buyers and those with smaller deposits. The average rates for two-year fixed mortgages at 90% and 95% LTV have decreased significantly from their peak in August 2023.

Springall also points out the increasing variety of mortgage deals available, especially for those with smaller deposits. The 90% LTV sector, for instance, now offers over 700 deals, a significant rise compared to a year ago.

The Urgency of Refinancing

With the average SVR currently above 8%, Springall advises borrowers, especially those on a standard variable rate, to consider remortgaging. The gap between fixed rates and SVRs has widened, making fixed-rate mortgages more appealing. Lenders are expected to continue adjusting their rates as the year ends, potentially leading to even better deals.