Mortgage rates at new low

The two year fixed mortgage average slips under 5% for the first time since the mini budget.

Mortgage rates dip below five percent after BoE move

Moneyfacts reports the average two year fixed mortgage rate at 4.99 percent, the first time the measure has fallen below 5 percent since the Liz Truss mini budget. The move follows a Bank of England base rate cut to 4 percent last week, which lenders say reduces borrowing costs while inflation risks remain a constraint on how far deals can fall. Even with a general easing, borrowers still face a wide range of products and a mixed picture on affordability.

Market expectations point to further reductions before the end of 2025, with traders pricing a path to around 3.75 percent by December according to data from the London Stock Exchange Group. Lenders are competing for customers but remain selective, and some borrowers still see higher monthly payments than before the mini budget due to persistent price pressures. The wider economy and inflation outlook will continue to shape how far mortgage pricing can travel.

The sub 5% milestone shows policy credibility still matters. The mini budget legacy left a memory of volatility that has kept mortgage costs higher than pre crisis levels and shaped lender caution. As the BoE balances easing with inflation risks, rate moves will reflect both financial stability and political signals. This moment offers relief for borrowers, but it does not erase the broader questions about future policy and its impact on housing costs.

Highlights

The path ahead will hinge on inflation and policy signals alike.