Two-Year Mortgage Rates Drop Below 5% – Lowest Since 2022
Good news for anyone keeping an eye on mortgages: the average two-year fixed rate has just dipped below 5% for the first time in almost three years. According to Moneyfacts, the typical deal now sits at 4.99%.
The last time rates were this low was back in September 2022, right before Liz Truss’s infamous “mini-budget.” That set of unfunded tax cuts and spending plans shook the markets, drove government borrowing costs up, and pushed mortgage rates to around 6%. The Bank of England even had to step in to prevent chaos in pension funds.
Why are rates coming down?
This drop follows the Bank of England’s decision to cut its base interest rate to 4% last week. Cheaper borrowing makes mortgages more affordable, and the move came as the Bank tried to support a slowing economy.
But don’t expect rates to fall too much further just yet. Inflation is still a worry—things like higher employer costs and weaker harvests are pushing up prices—so lenders aren’t rushing to offer bargain mortgage deals.
What does this mean for you?
Moneyfacts says borrowing costs are still far higher than the super-low levels we saw before 2022. That said, the dip below 5% shows lenders are competing harder for customers, which could mean more choice and slightly better deals.
Looking ahead, markets expect another small cut to the Bank of England’s base rate before the end of 2025—possibly down to 3.75% in December. If that happens, we could see mortgage rates ease even further.
