Rachel Springall, Finance Expert at Moneyfacts, said:

“The consecutive reductions to the overall average two- and five-year fixed mortgage rates will be of great relief for borrowers looking to refinance this year. The volatility surrounding mortgage rate pricing eased, as the average mortgage shelf life rose from 17 days to 21 days, the highest figure recorded in over six months. There are big expectations for fixed mortgage rates to fall in the coming weeks, so some borrowers may choose to wait patiently for the right time to change their deal or buy their first home.

“Those comparing different mortgage offers may be pleased to see a big uplift in choice, as there was a rise of 200 residential mortgages month-on-month. This was the biggest rise month-on-month in product choice since September 2023, which was an extremely busy period for lenders, when repricing was rife, and the average shelf life of a deal was just 15 days. A rise in choice and cheaper mortgage rates are promising signs for those looking to refinance this year. However, those coming off either a two- or five-year fixed mortgage will be paying around 3% more on their mortgage, based on our average rates, when they lock into a similar term for peace of mind. Despite this, it would be cheaper than reverting to a standard variable rate (SVR), which charge over 8% on average.

“Borrowers with a limited deposit or equity, such as first-time buyers, are benefiting from an increase in product choice and lower mortgage rates. The availability of deals at the 95% loan-to-value tier (270) has increased to the highest level since September 2022 (274) and the average two- and five-year fixed rates at this tier are at their lowest since June 2023. However, if borrowers can stretch their deposit to 10% then they will find greater choice and cheaper rates. Consumers would be wise to seek advice to assess the latest offers based on true cost and not be swayed by a headline grabbing rate.”