The average two-year fixed mortgage rate has dipped below 5% for the first time since former Prime Minister Liz Truss’ mini-Budget, data from Moneyfacts shows.  

The two-year residential term hit 4.99% today, the first time it has fallen under 5% since 29 September 2022, when it was 4.87%. 

This was a few days after the Truss mini-Budget on 15 September, which sparked a meltdown across UK financial markets that led to hikes in mortgage rates, a fall in the value of the pound, the danger of widespread failure across the pensions industry and rises in the cost of UK government borrowing.    

Moneyfacts head of news Adam French says: “Average two-year fixed mortgage rates dipping below 5% for the first time since the Liz Truss mini budget in 2022 is a symbolic turning point.  

“While the cost of borrowing is still well above the rock-bottom rates of the years immediately preceding that fiscal event, this milestone shows lenders are competing more aggressively for business.” 

The fall comes after Bank of England rate setters cut the base rate by a quarter point to 4% last week, its third reduction of the year, and the lowest level since March 2023. 

However, inflation in the year to June rose to 3.6%, partly due to higher food and clothing costs — and remains above the Bank’s 2% target.   

French adds: “While mortgage rates have followed the mood music set by successive cuts to the Bank of England base rate, homeowners and first-time buyers may have to wait longer for more substantial cuts. 

“Inflation is forecast to spike at 4% in the autumn and not return to its 2% target until 2027 or beyond which is likely to mean the base rate will hold around its current level for longer.” 

The average five-year residential fix is 5% today, down a single basis point from yesterday. 

The average two-year buy-to-let fix is 4.90% today, unchanged from yesterday. 

The average five-year BTL mortgage fix is 5.23% today, unchanged from yesterday, Moneyfacts adds.