Average two and five-year fixed-rate mortgages have edged down to their lowest levels in six months, according to Moneyfacts.

The latest Moneyfacts UK Mortgage Trends Treasury Report data reveals the overall two-year fixed mortgage rate stands at 0.32% higher than the five-year equivalent. It has been 15 years since the average two-year fixed was priced this far higher. Both rates stand at their lowest levels in six months, after a fourth consecutive month of falls.

Rachel Springall, mortgage market analyst at Moneyfacts, said: “The momentum in the residential mortgage market is positive, as fixed rates fell and product choice stabilised month-on-month. Lenders have continued to reduce fixed rates, with the average five-year fixed rate resting below the equivalent two-year.

“The average two-year fixed rate stands at 0.32% higher than the average five-year equivalent. The last time the average two-year fixed rate was this far above the five-year was 15 years ago. Rate competition among lenders has been more focused on longer-term fixed mortgages. As the overall two- and five-year fixed average rates drop to their lowest levels in six months, borrowers who put their plans to remortgage on hold towards the tail end of last year may now be looking at the latest offers.

The latest report also shows that product choice currently stands at 4,372 options, a subtle rise from 4,341 in February 2023. Within the individual loan-to-value (LTV) tiers, following a rise of 51 to 657, availability within the 60% LTV tier is at its highest level on Moneyfacts records.

Also, both the average two- and five-year fixed rates fell month-on-month for the fourth month running, down to 5.32% and 5.00% respectively, now both at their lowest levels in six months. The average two-year fixed rate stands at 0.32% higher than the average five-year equivalent. The last time the average two-year fixed rate was this far above the five-year was 15 years ago (February 2008 – 0.36%).

Furthermore, the average ‘revert to’ rate or Standard Variable Rate (SVR) continued to climb. At 7.12%, this rate has breached 7% for the first time since October 2008 and is now the highest rate since April 2008 (7.16%).

Meanwhile, the margin between the average two-year fixed rate taken out two years ago (2.57%) and the average ‘revert to’ rate (7.12%) rose to 4.55% in March, the largest margin on Moneyfacts records.

Springall commneted: “Prospective borrowers with a limited deposit or equity may be pleased to see fixed rates at higher loan-to-value deals are reducing. The average five-year fixed rate at 90% and 95% loan-to-value fell to 4.99% and 5.33% respectively month-on-month, which is 0.16% and 0.13% lower compared to the start of October 2022. At the other end of the spectrum, in the 60% loan-to-value tier, the average five-year fixed rate has fallen by 0.18% from 4.94% to 4.76% over the same period. Product choice also grew notably overall in the 60% loan-to-value tier month-on-month, following a rise of 51 options to 657, now at its highest level on our records.

“It is positive to see fixed rates falling, but at the same time, variable interest rates are rising significantly. The average Standard Variable Rate (SVR) has now breached 7% for the first time since October 2008, which means borrowers will be in for a shock if they are about to revert from a low fixed rate deal. Indeed, the margin between the average two-year fixed rate taken out two years ago (2.57%) and the average ‘revert to’ rate (7.12%) stands at 4.55% in March, the largest margin on Moneyfacts records. Borrowers must therefore ensure they carefully consider the mortgage options available to them, particularly fixed rates, if they want peace of mind to secure their monthly repayments.”