Average five-year mortgage rate drops below 6%

The last time the average rate for a five-year deal fell below 6% was in July 2023.

The average rate for a five year fixed mortgage fell to 5.99% today – the first time this rate has dropped below 6% since 3 July 2023, according to Moneyfacts’ data.

This follows the Bank of England’s Monetary Policy Committee (MPC) voting last week to keep the base rate unchanged at 5.25%.

Caption: Average five-year mortgage rate dropped to below 6% today, shown here alongside the rates from the mini budget of September 2022. Chart created with flourish.studio.

Earlier this year, mortgage rates were driven up by consecutive increases to the base rate as the Bank of England attempted to tackle chronically high inflation.

The average rate for a two year fixed mortgage hit 6% on 17 June 2023, while the average five-year deal breached this threshold on 4 July 2023. Both continued to rise over subsequent months.

With the Office for National Statistics (ONS) announcing last week inflation fell to 6.7% in the year to August, and the MPC opting to keep borrowing costs unchanged, the average five-year mortgage rate dropped back below 6%.

Meanwhile, the average rate for a two-year deal has also seen a steady decrease since the start of August and currently sits at 6.50%.

With the average two and five-year fixed rates falling and product choice at its highest since February 2022, the mortgage market is showing some signs of recovery after a turbulent time for many borrowers.

While the average rate for a five-year mortgage now sits at 5.99%, it’s possible to find rates below this, with sub 5.00% deals on offer from lenders such as Virgin Money, NatWest, HSBC and Nationwide BS.

Our weekly mortgage roundup provides details of some of the lowest rates available. Alternatively, for an overview of the mortgage market, visit our charts.

Otherwise, consider speaking to an independent mortgage adviser about your options. Speak to Mortgage Advice Bureau today.