Two- and five-year fixed mortgage rates dropped by 0.16% and 0.11% respectively, marking the largest monthly reductions since October 2024, Moneyfacts has revealed.

The product data firm’s latest Moneyfacts UK Mortgage Trends Treasury Report found that both two- and five-year fixed rates averaged 5.52% in July, the lowest rate since March.

It added that his downward trend "edges the rates away from inversion", where the two-year average rate was priced higher than the five-year rate for three consecutive months between April and June.

The number of fixed products available in July increased by 0.6% month-on-month to 7,177, with the market continuing to recover from severe withdrawals caused by unsettled markets due to the Middle East conflict.

However, there are still 307 fewer deals compared to the start of March.

The average product shelf-life also dropped from 15 days to 14 in July, as lenders caught up to reprice their deals amid moving swap rates.

Moneyfacts added that the incentive to remortgage remains strong, as with fixed rates much lower than the average ‘revert to’ rate or standard variable rate (SVR).

The average SVR remains at 7.13%, which is a 0.29% year-on-year change, with the highest rate standing at 8.19% between November and December 2023.

Finance expert at Moneyfacts, Rachel Springall, said that borrowers will “breathe a sigh of relief” as mortgage fixes fell at the fastest pace for almost two years.

She stated: "It has been three months since fixed rates inverted, where the two-year fixed has been higher than its five-year counterpart. This has started to unwind, so the rates should hopefully start to fall back into a more traditional pricing structure. However, this positive trajectory could be thrown off course, as renewed escalation in geopolitical tensions could slow the tempo of mortgage rate cuts.

"Stability appeared to be a recurring theme during June, with the average shelf-life of a deal recorded at 14 days, from 15 days the month before. This is a much more acceptable timeframe compared to the record low of eight days recorded at the start of April. Borrowers with just a small deposit or equity of 10% may be pleased to know that further recovery of product choice at 90% LTV has surpassed 900 options for the first time since the start of March 2026."

She added that while there are ongoing affordability pressures in the mortgage market, a recent study has revealed that 88% of UK adults feel that homeownership is important, and therefore lenders need to continue providing products to support first-time buyers.

Springall concluded: "Buyer confidence may well remain subdued until the supply of affordable housing improves this year, but for now, mortgage costs are not expected to rapidly escalate. However, there are other ways to reduce the costs of buying a home and stimulate the housing market, such as adjusting the nil-rate bands threshold for stamp duty land tax for first-time buyers. Seeking advice in the first instance to understand costs and to navigate the mortgage maze is vital, as headline-grabbing low-rate deals might not always be the best choice."

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