Mortgage rate gap drops but pricing remains high

The pricing gap between the average two- and five-year fixed rate mortgage has fallen to its lowest margin in two years.

Data from Moneyfacts shows average mortgage rates on the overall two- and five-year fixed rates fell by 0.04% and 0.03% to 5.48% and 5.25% respectively as of the start of January 2025.

At the start of January 2024, the average five-year fixed rate was 5.55% but is now 5.25%.

The average two-year fixed rate has dropped by 0.45% over the same period, down from 5.93% to 5.48%.

This gives borrowers extra options and product choice is now at 6,508, compared with 5,899 at the start of 2024.

It comes amid uncertainty about the number of interest rate cuts this year, which may keep mortgage costs high and dent homebuyer confidence. Estate Agent Today