Average two- and five-year fixed mortgage rates have fallen to a six-month low, according to Moneyfacts.

The financial information provider said that fixed rates have now fallen for four months in a row. The average two-year fixed rate is now 5.32% and the average five-year fix is 5.00%.

This means that the average two-year fix is therefore 0.32 percentage points higher than the five-year equivalent – a gap that hasn’t been seen since February 2008.

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.

Standard variable rates rising

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

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.

Product choice increases

Product choice 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.

Rachel Springall, finance expert 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.

“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.”

“It is positive to see fixed rates falling, but at the same time, variable interest rates are rising significantly. 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.”