Fixed rate mortgage deals are now at their cheapest in more than three years since the Truss-Kwarteng infamous Mini Budget of 2022.
New figures show two and five-year rates both fell recently and are now back to their most competitive level following the disastrous budget measures.
Average rates on two and five-year fixed deals fell by 0.08% and 0.1%, to 4.86% and 4.91% respectively, the data from Moneyfacts reveals.
It is the first time the five-year rate has dropped below 5% since May 2023.
Year-on-year falls
Overall, the average mortgage rate fell to 4.91% month-on-month from 4.99%. Year-on-year the rate is down by 0.53%, from 5.44% in December 2024.
The average two-year tracker variable mortgage rate remained unchanged at 4.66% month-on-month, but has fallen by 0.8% in a year from 5.46%.
This week, NatWest became the latest bank to cut mortgage rates, following reductions by Santander and Nationwide earlier this month.
The Bank of England’s decision makers announce their next base rate decision next week, on 18 December, and the latest inflation figure is revealed the day before.
The Budget has been and gone, expectations for another base rate cut are high.”
Rachel Springall, Finance Expert at Moneyfacts (main picture), says: “The improvement in cost and product availability of mortgages paints a positive picture for borrowers as we edge towards the New Year.
“This year has not been without a few ups and downs for rate moves and product availability, but all signs are looking encouraging for the mortgage market to thrive moving into 2026,” she says.
“The Budget has been and gone, expectations for another base rate cut are high, and muted house price growth as a combination can lead to optimistic sentiment among buyers.”
