Average Five-Year Mortgage Rate Drops Below 5% First Time Since May 2023

Mortgage rates have dropped notably, with the average five-year fixed-rate mortgage falling below 5% for the first time since May 2023, reaching 4.99%, while the two-year fixed rate also dipped to 4.97%. This decline is attributed to cautious rate cuts by prominent lenders like Barclays, Santander, and TSB, amid swap rate volatility, and follows the Bank of England's recent base rate reductions. The 30-year mortgage rate in the U.S. also fell to a 10-month low of around 6.55%, driven by a weak jobs report, neutral inflation, and increased home inventory, which is shifting buyer sentiment from affordability concerns to broader economic uncertainties. Lower mortgage rates have contributed to a decrease in typical monthly payments, with figures dropping to their lowest since January 2025, encouraging buyer activity despite a slight rise in home prices and a cooling housing market. Additionally, the broader UK housing market shows signs of growth, with house prices increasing by 3.7% annually and rents rising by 5.9%. Buyers currently have more leverage due to longer market times for homes and sellers’ increased willingness to negotiate.