The average five-year fixed-rate mortgage fell to 5.07% this week, down from 5.30% a year ago, data from Rightmove shows, ahead of the Bank of England’s rate decision tomorrow. 

The average two-year fix is 5.48%, down from 5.55% 12 months before.  

These core five- and two-year terms have moved down from their July peaks of 6.11% and 6.61%, respectively.  

This means the monthly mortgage payment on an average home — which is £283,615, according to the latest Halifax data — has fallen to £1,793 from £2,068 in July.  

The average monthly mortgage payment on a typical first-time buyer property on an average five-year fix, with an 85% loan-to-value mortgage, is £1,111 per month, down from £1,139 per month a year ago.  

However, these monthly payments will be hundreds of pounds higher for remortgagers coming off sub-2% rates two years ago, following the Bank raising the base rate from 0.1% in December 2021 to currently stand at 5.25%.   

The Bank is battling inflation, which stands at 4.6%, as economists forecast the central bank will hold rates tomorrow for the third time in a row.  

Rightmove mortgage expert Matt Smith says: “No news is often good news when it comes to the mortgage market, and yet another week – the 20th in a row – of marginal percentage point drops is positive news for homemovers.   

“Swap rates have also remained steady this week, but fell further on the back of the UK gross domestic product data [which fell 0.3% in October] published today — a good indicator that the markets are confident about how tomorrow’s base rate announcement will play out.  

“After the chunky drop in inflation was announced in mid-November, it looked even more likely that tomorrow will bring a third consecutive base rate hold.   

“And while these pauses come off the back of falling inflation and a more positive economic outlook, the Bank has indicated that we’re unlikely to see any base rate drops until we’re well into 2024.   

“However, markets are currently forecasting that the first base rate reduction may arrive in late spring next year.  

“A hold tomorrow could provide some room for lenders to offer further mortgage rate drops – though it’s likely that lenders may hold back offering these to borrowers this side of Christmas, to take advantage of the seasonal jump in demand that usually happens in January.”