The markets were pricing in the Bank of England base rate reaching 6% next year, following its rise from 1.75% to 2.25% last month.

Mortgage rates for the average two-year fixed deal had already climbed past 6% following the aftermath of the ill-fated mini Budget.

However, the U-turns announced today by new Chancellor Jeremy Hunt have restored some stability in the markets following the turmoil in gilt yields, sterling and mortgage rates.

According to the Centre for Economics and Business Research (CEBR), the market expectations for the Bank of England base rate have fallen, and are now pricing in a peak of 5.15% next year.

Josie Dent, managing economist at the CEBR, said: “This will naturally have knock-on impacts for mortgage rates, which are likely to be slightly lower now.

“However, the Bank of England is still going to continue raising interest rates. We’re forecasting this base rate to be above 3.5% by the end of the year.”

CEBR currently forecasts two 75 basis point rises in the base rate before the end of 2022.

Data from Moneyfacts revealed average two-year fixed rates stood at 6.47% today, having reached this level on Friday. This is up from the 2.25% recorded on 1 October 2021.

Meanwhile, the average five-year fixed rate stands at 6.29%, climbing from 2.55% in October last year.

As of today, there are 3,104 mortgage products available on the market, down from 5,315 recorded in December 2021. But this figure is up from the low of 2,258 available on 1 October 2022.