The typical two-year mortgage rate saw its biggest drop in a year as lenders continue to make rate cuts.
A 0.10% decline during the month of May may not seem like much, but it comes on the heels of a spike in prices that occurred when the war in Iran began in March.
According to Moneyfacts, the average two-year fixed rate fell from 5.78% to 5.68% between the beginning of May and the beginning of June.
Meanwhile, the average five-year fixed rate also saw a decrease of 0.05% from 5.68% to 5.63%.
In more good news for borrowers, the number of mortgages available also rose above 7,000 for the first time since March.
Rachel Springall, a financial expert at Moneyfacts, said we may see signs of recovery after the price spike that occurred in the early spring.
“The mortgage market has shown countless times how it can recover after periods of turmoil, and once again, product choice is slowly on the road to recovery,” she said.
“It has now been three months since the conflict in the Middle East began which sent a shock wave of uncertainty across markets. These events have completely upended the expected path of 2026 interest rate setting and alarmed lenders into withdrawing mortgage deals from sale. Fortunately, volatility surrounding swap rates has subsided somewhat.”
The data comes after Moneyfactscompare.co.uk revealed how more borrowers are opting for two-year fixed rates over five years because they offer more flexibility if interest rates fall.
In fact, mortgage brokers and experts advise anyone about to take out a mortgage to secure a deal rather than wait in the hope of further rate cuts.
Emma Jones, Managing Director at Runcorn-based Whenthebanksaysno.co.ukHe told news agency Newspage that borrowers should be proactive.
“In a volatile market like this, we encourage all borrowers, whether first-time buyers or those nearing the end of their current mortgage deal, to lock in an interest rate just in case interest rates start to rise. Being proactive has never been more important,” she said.
