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Borrowers breathe a sigh of relief as fixed mortgage rates fall and choice hits 15-month high

Paloma Kubiak
Written By:
Paloma Kubiak

Average mortgage rates fell in May as product choice reached a 15-month high, indicating a return to a steady market, data from a financial information company has revealed.

The Moneyfacts UK Mortgage Trends Treasury Report revealed that fixed rate mortgages declined across the board from April to May, with the average two-year fix priced at 5.26% compared to 5.35% last month, and the average five-year fix is 4.97% down from 5.05%. 

Fixed rates are still considerably higher than they were last year, when the average two-year fix was 3.35% and the average five-year fix was 3.17%. 

Base rate hikes push up SVRs

However, the average standard variable rate (SVR) rose, reflecting the consecutive increases to the Bank of England’s base rate. Across all loan to value (LTV) categories, the average SVR stood at 7.37% in May, up from 7.3% last month. 

The average two-year tracker rate also increased from 5.02% in April to 5.07% in May. 

Springall added: “As was widely anticipated, variable rates continued to rise, but fixed mortgage rates rest lower on a month-on-month basis.  

“Promising as these signs may be, it is anticipated fixed interest rates will start to rise due to volatile swap rates, and for the eighth month running, the average five-year fixed mortgage rate rests lower than the two-year equivalent.” 

She said borrowers coming off a fixed rate deal may be “understandably concerned” about the difference between their existing rates and current pricing. 

Springall said: “In May 2021, the average two-year fixed mortgage rate stood at 2.57%, it is now more than double that. Those on a longer-term fixed mortgage may note the average five-year fixed mortgage rate in May 2018 stood at 2.91% but is now over 2% higher.” 

Product choice hits 15-month high

Moneyfacts found that there were 5,264 mortgage options on the market, the highest number of products since February 2022 when there were 5,356 deals. 

There are also more than double the number of mortgages available now than there were in October last year, just after the mini Budget and subsequent fallout. 

The number of mortgages on the market in May was up from 5,416 in April and 5,087 during the same month last year. 

Moneyfacts also found that product choice at the 75% and 85% loan to value (LTV) tiers was at the highest on record. 

Options at higher LTVs were slightly down when compared to last year, with 212 mortgages at 95% LTV compared to 369 a year ago and 675 options at 90% LTV, compared to 692. 

Mortgages at 95% LTV rose slightly from 204 in April, but options at 90% LTV fell slightly from 684. 

Product count at 60% LTV came to 676 in May, which was down on April’s 702 options but an improvement from last year when there were 580. 

The average shelf life of a mortgage improved from 21 days in April to 25 days in May, and was better than the 21-day average recorded last year. 

Springall said the mortgage market was showing “positive signs of resilience and growth”.