Average home loans on two- and five-year fixed rate deals fell to their lowest rates since March, data from Moneyfacts UK Mortgage Trends Treasury Report shows.
Two-year rates fell 18 basis points to 5.77% between the start of July and the start of August, while five-year rates were 15bps lower at 5.38% over the same period.
The moves halt five consecutive months of rises.
However, the average shelf-life of a mortgage product dropped to 17 days, down from 30 days.
Product choice was broadly flat, falling by one loan month-on-month, to 6,657 options.
The report also highlighted that the average two-year tracker variable mortgage rose by one basis point to 5.95% over the month.
The average standard variable rate also fell by one basis point to 8.16%, which is just lower than the highest recorded, at 8.19%, during November and December last year.
Moneyfacts finance expert Rachel Springall says: “Lenders re-priced their deals with vigour during July due to falling swap rates, and the volatility within the mortgage market was made clear by the notable drop in the average shelf-life of a mortgage to just 17 days, down from 30 in June.
“There are expectations for rates to fall further in the weeks to come, particularly as the market reflects on the 0.25% base rate cut, the first cut in over four years.”
Springall points out: “The rise and fall of product choice was significant during July; the total count peaked at 6,949 on 19 July before falling to 6,621 just four days later. Choice slowly rose in the coming days to sit at 6,657 on 1 August, just one product shy of July’s total product count (6,658).
“The only increases in availability were seen in the lower 60% and 75% loan-to-value brackets in August. At the other end of the LTV spectrum, in contrast to a prior rise in choice between June and July, the number of mortgages available at 95% LTV fell slightly by the start of August.
She adds: “However, the biggest month-on-month drop within any LTV bracket was at 80% LTV, which fell by 53 products, dropping to the lowest level since March 2024.
“This may come as disappointing news to borrowers with a limited deposit or equity, but choice could well bounce back in the coming months as lenders reassess their approach to lending at these higher LTV brackets.”
