Rachel Springall, Finance Expert at Moneyfacts, said:

“Fixed mortgage rates fell across the spectrum during August, which will be welcome news for prospective borrowers. Overall, the average two- and five-year fixed rates have now fallen for the second month running and are back down to levels not seen for over six months. It can take a few weeks for lenders to react to a volatile swap rate market, so it’s good to see mortgage pricing moving in a positive direction. A sense of product stability also returned to the market, as the average shelf-life of a deal rose to 21 days, up from 17 days in August.

“This month marks two years since the fiscal announcement took place, and subsequent unsettled times saw significant rises to mortgage rates. At the start of September 2022, the average two-year fixed mortgage rate stood at 4.24%; a year later it was 6.70%. Fixed mortgage rates are now much lower than they were this time last year, but it remains the case that the average five-year average rate is lower than its two-year counterpart, which has been the case since October 2022. The start of August also brought the first Bank of England base rate cut in over four years, which has led to reductions in both the average two-year tracker rate and average Standard Variable Rate (SVR), but fixed rates remain lower on average.

“Mortgage availability was impacted during August, as product choice felt its biggest month-on-month drop since February 2024, quite a contrast to the notable uplift in products seen during previous months. A deeper dive into the loan-to-value (LTV) sectors revealed the biggest drops were at 85% and 80% LTV of 27 and 25 deals respectively. A fall in choice in these areas may come as disappointing news to those borrowers with limited deposits or equity, but choice is more plentiful than a year ago. Those borrowers ready to switch their mortgage would be wise to seek independent advice to go over their options.”