Average mortgage rates have dropped by a "significant margin" in May, with the average two-year fix falling to the lowest point since before the mini-Budget in September 2022, Moneyfacts has revealed.

The firm’s latest report showed that the average mortgage average two and five-year fixed mortgage rate across all LTVs stands at 5.18% and 5.10% respectively in May 2025.

Year-on-year, the average two-year fixed rate has dropped by 0.73%, while the average five-year fix has fallen by 0.38%. The last time these rates were lower was in September 2022 and November 2024, respectively.

Moneyfacts stated that although the average two-year fixed rate is 0.08% higher than the five-year equivalent, this is the lowest that the gap has been since rates became inverted in October 2022, following the mini-Budget.

The average two-year tracker variable mortgage rate dropped to 5.16% in this period, while the average standard variable rate currently stands at 7.58%.

In comparison, the highest recorded SVR stood at 8.19% in November and December 2023.

The report also found that the average shelf life for a mortgage product has dropped from 21 days in April to 19 days in May.

Furthermore, product choice has increased month-on-month to 6,993 options, which is the highest number in almost 18 years, when the number of products stood at 7,421 in October 2007.

Finance expert at Moneyfacts, Rachel Springall, said that with the momentum of rate cutting being "rife throughout April" and a drop in the average shelf-life of a mortgage, there has been "notable cuts" to overall mortgage rates.

She added: "Borrowers looking for a new deal may also be pleased to see the average two-year fixed rate has reached a notable milestone, falling to its lowest point recorded since the start of September 2022, before the notorious mini-Budget, or fiscal announcement.

"Product choice continues to thrive, and this can create a positive outlook among borrowers. There will be millions of consumers coming off low fixed rate mortgages over the next year and they need both the support and appetite for new business from lenders to secure new deals.

"First-time buyers remain an integral part of the mortgage market, so any relief on stress testing or innovative products can make a huge difference to those struggling to find an affordable home. Borrowers excited by the arrival of cheaper mortgage rates would be wise to seek advice to assess the overall cost of any deal to ensure it’s the right choice for them."

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