Mortgage rates fall at fastest pace in almost two years
Moneyfacts UK Mortgage Trends Treasury Report data reveals fixed mortgage rates have recorded their biggest monthly reductions since October 2024. Product choice rose and the churn of mortgage deals was stable.
Fixed mortgage rates dropped for a consecutive month, citing the biggest monthly reductions since October 2024, with the average two- and five-year fixed rates falling by 0.16% and 0.11% respectively, with both reaching 5.52%, their lowest points since the start of March 2026. The downward trend edges the rates away from inversion, where the two-year average rate has been priced higher than the five-year rate for three consecutive months (April to June).
The Moneyfacts Average New Mortgage Rate fell by 0.12%, to 5.47%, its biggest monthly fall since March 2025 (0.12%). It was last below 5% in March 2026 (4.90%).
Borrowers with a limited deposit or equity of just 5% will find rates lower month-on-month. The average five-year fixed rate at 95% loan-to-value (LTV) has dipped below 6% for the first time since March 2026.
Mortgage availability increased for a third consecutive month, with product choice rising by 45 deals to 7,177 options. The market continued its recovery from the severe withdrawals caused by unsettled markets due to the conflict in the Middle East. There are still 307 fewer deals compared to the start of March 2026.
Mortgage product churn continued throughout June, the average shelf-life of a deal now stands at 14 days, one day fewer than the month prior. Lenders were catching up to re-price their deals amid moving swap rates.
The incentive to remortgage remains strong, with fixed rates much lower than the average ‘revert to’ rate or Standard Variable Rate (SVR). The average SVR remains at 7.13%, down by 0.29% year-on-year from 7.42%. The highest recorded was 8.19% during November and December 2023.
Rachel Springall, Finance Expert at Moneyfacts, said:
“Borrowers will breathe a sigh of relief to see fixed mortgages falling at their fastest pace for almost two years, combined with a calmer period of product churn and an uplift in choice. Lenders responded positively to falling swap rates in June, seeing notable drops to the average two- and five-year fixed rates by 0.16% and 0.11% respectively, both settling at 5.52%. The last cuts of a similar scale came in October 2024, when the rates dropped by 0.16% and 0.13% respectively. It has been three months since fixed rates inverted, where the two-year fixed has been higher than its five-year counterpart. However, 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.
“Mortgage product choice recovery from the steep drops seen back in April may have slowed, with an uplift of 45 options since the beginning of June, but it is the combined total of 976 deals returning since the start of May that calls for celebration. This equates to around three-quarters (76%) of mortgage deals coming back of the 1,283 products withdrawn in April. 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. However, there is still room for improvement across the higher LTV terms, particularly for borrowers who can only amass a 5% deposit; these deals make up just 8% of the core market (5,848).
“Despite ongoing affordability pressures in the mortgage market, a recent study from Yorkshire Building Society revealed that 88% of UK adults felt homeownership is important. Therefore, it is vital that lenders continue to create innovative products and relax criteria carefully to support first-time buyers, as they remain the lifeblood of the mortgage market. 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 (SDLT) 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.”
Ian Harris, NAEA Propertymark President/Nathan Emerson, CEO at Propertymark, comments:
“Any fall in mortgage rates should help boost flexibility for both buyers and sellers, and it could perhaps be a sign that the UK housing market is overcoming what may be the worst of the mortgage rate rises witnessed in recent years.
“However, with inflation figures due next week, all eyes will likely turn to the Bank of England and its next base rate decision at the end of the month. There has been speculation that we may see a rate rise over the coming months, which could shift sentiment among lenders as the year progresses.
“Also, the appointment of a new Prime Minister could create uncertainty among buyers and sellers due to potential changes in housing policy going forward.
“So, while today’s news is welcome, it is important to consider the wider economic picture and the many different scenarios that could play out over the coming weeks and months.”
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