Average mortgage rates fell this week despite growing uncertainty over the next prime minister, according to the latest Moneyfacts rate watch.

The average two-year rate was 5.75%, down 3bps from 5.78% last week, while the typical five-year rate was 5.67%, down from 5.7%.

The biggest rate cuts were seen in five-year fixes to 100% LTV, which saw an 11bps drop to an average 5.89%.

Other noteable cuts were made to three-year fixes to 65% LTV, which fell 9bps to a typical rate of 5.03%, and two-year fixes to 50% LTV, which also fell 9bps to 5.29%.

Moneyfacts head of consumer finance Adam French said: “Average mortgage rates have inched lower this week despite growing uncertainty as markets fret over what a change of Labour leadership may mean for economic growth and fiscal policy.

“Although this marks a return to gradual improvement, rates remain considerably higher than before the conflict in the Middle East began. In total, 26 lenders made notable changes to their ranges. Ten lenders reduced selected rates, eight increased pricing, while 12 lenders launched new products or refreshed existing ranges.

“Larger lenders such as NatWest, Santander and first direct continued to compete most aggressively while smaller lenders who find it tougher to absorb elevated funding costs have been quicker to pass on increases.

“Mutuals such as Leeds, West Brom and Chorley Building Societies have delivered new and improved propositions targeting first-time buyers and home movers, despite signs of a more subdued property market.”

Notable rate changes this week

•      AIB (NI) – Fixed rates saw mixed movements, reduced by up to 3bps or increased by up to 18bps.
•      Accord Mortgages – Selected fixed rates increased by 10bps.
•         Bank of Ireland Intermediaries – Bespoke fixed rates reduced by up to 23bps; end dates extended; new Bespoke Large Loan products launched.
•         Buckinghamshire Building Society – Deposit Lite discounted variable products replaced with fixed rates.
•      Chorley Building Society – Selected fixed rates increased by up to 30bps; end dates extended; new 95% LTV first-time buyer products launched.
•      Clydesdale – Discounted variable rate end date extended.
•      Coventry Building Society – Fixed rates saw mixed movements, reduced by up to 12bps or increased by up to 5bps.
•      first direct – Selected fixed rates reduced by up to 22bps.
•      Furness Building Society – New fixed and large loan products launched with cashback and valuation incentives.
•      Gen H – Fixed rates increased by up to 18bps.
•      Hanley Economic Building Society – Mortgage range withdrawn.
•      Kensington – Selected products withdrawn; new Select and Select Special fixed rates launched; incentives expanded.
•      Leeds Building Society – Extensive new fixed rate ranges launched, including FTB and Reach products.
•      Mansfield Building Society – New 95% LTV fixed rate launched for house purchase borrowers.
•      NatWest – Selected fixed rates reduced by up to 21bps.
•      NatWest Intermediary Solutions – Selected fixed rates reduced by up to 21bps.
•      Nationwide Building Society – Selected fixed rates reduced by up to 36bps.
•      Newcastle Building Society – Fixed rates increased by up to 20bps; end dates extended; new tracker products launched; selected products withdrawn.
•      Progressive Building Society – Fixed and discounted variable rates reduced by up to 25bps; new fixed and New Venture products launched.
•      Royal Bank of Scotland – Selected fixed rates reduced by up to 21bps.
•      Santander – Selected fixed and tracker rates reduced by up to 19bps and 40bps respectively; selected FTB fixed rates increased; extensive new FTB fixed and tracker products launched.
•      Suffolk Building Society – Fixed and discounted variable rates increased by up to 16bps and 50bps respectively; end dates extended.
•      TSB – Selected fixed rates reduced by up to 20bps.
•      Vernon Building Society – Fixed rate end dates extended.
•      Virgin Money – Selected fixed rates reduced by up to 26bps.
•      West Brom Building Society – Selected fixed and New Build fixed rates reduced by up to 26bps; new purchase, remortgage and New Build products launched; selected products withdrawn.