Average five-year mortgage rate falls below 6%

The average rate on a five-year fixed mortgage has dropped below 6% for the first time in nearly three months.

Financial information service Moneyfacts said that as of Thursday, the typical rate stood at 5.99%.

Mortgage rates were driven up by 14 consecutive interest rate hikes by the Bank of England’s Monetary Policy Committee (MPC).

The average rate for a two-year fixed mortgage hit 6% in the middle of June 2023, while the average five-year deal crossed this threshold in early July. Both continued to rise over subsequent months.

At its last meeting, the MPC voted to keep the base rate unchanged at 5.25% and this — together with positive inflation data — has given lenders confidence to cut rates.

The average rate for a two-year deal has also been coming down and currently sits at 6.50%.

Nationwide, HSBC and NatWest are among the major lenders that have cut the cost of their mortgage deals.