Two-Year Fixed Mortgage Rates Drop to Lowest in Nearly Three Years
Mortgage rates have just taken a dip to levels we haven’t seen since before Liz Truss’s mini-Budget back in 2022. For anyone looking to buy a home or remortgage right now, that’s actually some welcome news. The average two-year fixed mortgage rate has fallen to 4.98 percent, which means for the first time in almost three years, it’s sitting below the 5 percent mark. Some borrowers can even get deals just under 4 percent if they’ve got solid equity or a decent deposit.
To put this into perspective, if a household fixes a £200,000 mortgage over 25 years at today’s average rate, the monthly repayments would be around £1,167. That’s still a big commitment, but definitely less daunting than what people were facing when mortgage rates were soaring past 6 percent just a year or two ago. The chaos after Truss’s mini-Budget in September 2022 sent borrowing costs spiraling, with two-year and five-year fixed deals both climbing above 6 percent. By the summer of 2023, rates peaked even higher—nearly 7 percent in some cases—thanks to a mix of inflation worries and Bank of England rate hikes.
So, what’s changed? The Bank of England has trimmed the base rate several times over the past year, bringing it down from 5.25 percent to 4 percent. That’s helped ease mortgage rates across the board. On top of that, lenders are competing fiercely for business, partly because many banks are lagging behind on their lending targets. That competition is pushing rates down further.
Also Read:- Errani & Vavassori Defend US Open Mixed Doubles Crown in Thrilling Final
- First In-N-Out in Washington Draws Overnight Fans
Now, the big question is whether to lock in for two years, five years, or maybe even try a tracker mortgage. Two-year fixes are popular because they give borrowers the option to re-fix sooner if rates continue to fall. Santander’s data actually shows more than half its customers this year have chosen two-year deals. But five-year fixes still appeal to people who want certainty and don’t want to gamble on what rates might look like in 2027. And then there are tracker mortgages, which follow the Bank of England’s base rate. They can be attractive, especially since forecasts suggest rates could fall further, but they do carry the risk of going up again if inflation doesn’t play ball.
Economists are split: some predict rates could fall to 3 percent by 2026, while others think they’ll stay closer to 4 percent. That’s why the decision really comes down to personal circumstances—whether you might move soon, how much risk you can handle, and how secure you want your monthly payments to be.
For anyone whose fixed rate is ending or who’s buying right now, it’s wise to shop around as early as possible. Deals can be secured up to nine months in advance, and often without paying upfront fees. With rates changing quickly, a bit of preparation could make a big difference to what you’ll be paying over the next few years.
Would you like me to also craft this into a shorter 1–2 minute spoken-style summary , almost like a newsreader script, so you have both long and quick versions ready?
Read More:
0 Comments