The average rates on all loan-to-value (LTV) tiers across two and five-year fixed mortgages has fallen for a fourth consecutive month, data from Moneyfacts has revealed.

According to the latest Moneyfacts UK Mortgage Trends Treasury Report, average rates on a two and five-year fixed mortgage overall are now at a six-month low.

Average two and five-year fixed rates fell between the start of November and the start of December, to 6.04% and 5.65% respectively, now at their lowest levels since June. The average two-year fixed rate stands 0.39% higher than the average five-year equivalent, which is a narrower gap than the 0.43% difference last month.

Moneyfacts also reported that the average ‘revert to’ rate or standard variable rate (SVR) remained unchanged. At 8.19%, this rate is at the highest level on Moneyfacts’ electronic records, which started in July 2007.

The average two-year tracker variable mortgage rate increased month-on-month to stand at 6.16%.

Finance expert at Moneyfacts, Rachel Springall, said that the fall in fixed mortgage rates will come as “good news to borrowers across the spectrum”, including first-time buyers.

“Those borrowers with small deposits will find that average rates are now down considerably from just a few months ago, with the average two-year fixed rate at 90% and 95% LTV resting at 6.01% and 6.34% respectively, down from 6.81% and 7.10% in August 2023, which was the highest monthly point in 2023,” Springall commented.

“This could improve the potential mortgage affordability of would-be buyers or those looking to remortgage with limited equity.”

Moneyfacts also reported that overall product choice in the mortgage overall increased month-on-month, for a fifth consecutive month, to 5,694 options, which is the highest level of availability in over 15 years. The last time there were more deals available was March 2008, when there 6,192 products on the market.

“The choice of mortgage deals continued to rise month-on-month, including deals for borrowers with a smaller deposit or equity,” added Springall.

“Mortgages in the 90% LTV sector are in abundance, now with over 700 deals for borrowers to choose from, it is the highest count seen on our records in over a year (February 2022 – 735). This is promising as just one year ago there were less than 500 deals (December 2022 – 457).

“Those borrowers who can only stretch their deposit to 5% will find over 250 deals to choose from, compared to just 144 deals a year ago. It would be encouraging to see more appetite from lenders within the 95% LTV sector moving into 2024, particularly as the Mortgage Guarantee Scheme has been extended to the end of June 2025.”

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