UK Two-Year Fixed Mortgage Rates Fall Below 5% First Time Since 2022

The average two-year fixed mortgage rate in the UK has fallen below 5% for the first time since the September 2022 mini-budget announced by then-Prime Minister Liz Truss, which caused significant financial market disruption and increased borrowing costs. Currently at 4.99%, this decline marks a symbolic turning point as lenders compete more aggressively for business amid recent Bank of England base rate cuts, including a reduction to 4%. Despite this, inflation remains above target and is expected to rise to 4% in the autumn, likely keeping the base rate at current levels until at least 2027, which means more substantial mortgage rate cuts may take longer to materialize. Around 1.6 million fixed mortgage deals will expire in 2025, potentially impacting many borrowers. The recent rate trends reflect a cautious financial environment following the turmoil triggered by the £45 billion unfunded tax cuts in 2022 and ongoing inflation pressures. Overall, while mortgage rates are easing, homeowners and first-time buyers should anticipate continued challenges due to economic uncertainties and inflation forecasts.