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Mortgage rates continue to fall as product choice improves to 15-year high

Mortgage rates continue to fall as product choice improves to 15-year high
Shekina Tuahene
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Shekina Tuahene

Average mortgage rates declined for the second month in a row, according to a financial data research firm.

The Moneyfacts UK Mortgage Trends Treasury Report highlighted reductions across two and five-year fixed rates at all loan to value (LTV) tiers. 

The average two-year fixed rate was 6.47% in October, down from 6.7% in September. Meanwhile, the average five-year fixed rate fell from 6.19% to 5.97%. 

On average, rates for mortgages at 95% LTV fell by 0.17% month-on-month, while pricing fell by around 0.27% at both 90% and 60% LTV. This applied to both two and five-year fixes. 

The average two-year tracker rate also fell from September to October as the base rate was held at 5.25%. This declined from 6.25% to 6.17%. It was still notably higher than the same month last year when the average two-year tracker rate was 3.77%. 

Rachel Springall, finance expert at Moneyfacts, said: “Fixed mortgage rates have fallen across the spectrum, signalling a positive change in the market. Overall, the average two and five-year fixed rates have now fallen for the second month running, so borrowers can find cheaper deals to choose from. These are encouraging signs for borrowers who may be looking for a new fixed rate deal, but they still may be on the fence about locking in, hoping rates will fall further in the weeks to come.  

“One area of the mortgage market to feel a negative impact of rate rises month-on-month may well impact consumers who have or will fall off their fixed rate deal.” 

Moneyfacts said the average SVR was now at a record high and had risen by 3.78% since December 2021 to stand at 8.18%.

Mortgage products reach 15-year high

The report revealed overall product choice has grown month-on-month, up from 5,338 in September to 5,495 in October. This is also more than double the 2,258 available a year ago just after the mini Budget. 

It was also higher than the 4,939 mortgages that were on the market in October 2021 when activity was stable. 

The average shelf life of a mortgage was stable at 16 days, compared to 15 days in September. 

Springall added: “The volume of deals in each sector has blossomed to a level not seen since before the fiscal announcement, deals at 90% LTV are the highest since May 2023 (675), and deals at 95% LTV are the highest since the start of September 2022 (274). 

“Across the whole mortgage market, product choice is at its highest level since March 2008 and the average shelf life rose slightly to 16 days, a sign the market is stabilising.”