Mortgage rates fall for a fourth consecutive month, but lenders act more cautiously

Meanwhile, mass repricing caused product choice and shelf-life to dip.

Mortgage rates declined throughout May for a fourth consecutive month, data from the latest Moneyfacts UK Mortgage Trends Treasury Report revealed. Although undoubtedly a relief for the millions of borrowers with fixed deals set to end this year, lenders appeared to adopt a more cautious approach when repricing their fixed products, as average rates dropped by a smaller margin than seen in previous months.

The typical rate charged by a two-year fixed deal, for instance, fell by 0.06 percentage points between the start of May and June to sit at 5.12%. Meanwhile, the average five-year fixed mortgage rate dropped just 0.01 percentage point to reach 5.09% over the same timeframe.

By comparison, average two- and five-year fixed rates fell more steeply by 0.14 and 0.08 percentage points, respectively, in the month to May.

Why is rate-cutting momentum slowing?

Some borrowers may have hoped mortgage rates would fall rapidly in response to the Bank of England’s Monetary Policy Committee (MPC) lowering the base rate to 4.25% in early May. However, it’s often the case any changes to the UK’s central interest rate affect variable deals most acutely, as lenders often price market forecasts into their fixed mortgages months in advance.

Indeed, the average two-year variable tracker rate dipped below 5.00% at the start of June for the first time since March 2023 after falling by a considerable 0.25 percentage points month-on-month to reach 4.91%.

In contrast, inflation reaccelerating to 3.5% in April cast fresh doubt over if and when the Bank of England base rate would be reduced further and might have prompted lenders to act more conservatively when cutting their fixed deals.

This was further compounded by recent swap market volatility which Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, explained could have the opposite effect in driving rates back up.

Those looking for a new deal would therefore be wise to compare rates often and could consider speaking with a broker for help navigating the ever-changing mortgage market.

Product choice and shelf-life slip

Borrowers currently have fewer mortgage deals to choose from, with the Moneyfacts UK Mortgage Trends Treasury Report finding product count dipped from just below 7,000 in May to 6,843 by the start of this month. Nevertheless, “the drop was relatively modest” and “choice overall is higher than at the start of 2025”, Springall reassured.

“This churn of mortgage deals can occur if lenders pull and replace deals to cope with interest rate moves and borrower demand,” she explained.

“The flow of changes led to a drop in the average shelf-life of a deal to 17 days, now at its lowest point in three months. This may further prompt the millions of borrowers due to refinance this year to seek advice and secure a new deal,” she added.