Homeowners across the UK are being urged to take immediate action as average mortgage rates have finally fallen below the significant 5% threshold.
A Notable Milestone for Borrowers
Rachel Springall, a finance expert at Moneyfactscompare.co.uk, confirmed that before September 2025, the average mortgage rate had not dropped below 5% since September 2022. This period coincided with the short tenure of Conservative Party Prime Minister Liz Truss.
Ms Springall stated that borrowers will undoubtedly be thrilled to see this decline, especially the millions of homeowners whose cheap fixed-rate deals are set to expire before the end of the year. She described it as a notable milestone, though she cautioned that it remains uncertain how long these lower rates can be sustained.
The Critical Need for Professional Advice
Karen Noye, a mortgage expert at Quilter, emphasised that in the current climate, seeking professional mortgage advice is absolutely vital. An advisor can help navigate the fast-changing market, compare deals across different lenders, and secure the best product for individual circumstances.
She highlighted a crucial consideration for borrowers: many lower-rate deals come with fees that can sometimes outweigh any perceived savings. Furthermore, locking in a new deal early can help with effective budgeting, particularly for those facing higher monthly payments after moving from a lower-rate deal.
Ms Noye also provided reassuring news for those who act promptly, noting that if rates drop further before a new mortgage begins, most lenders will allow a switch to a cheaper deal.
Shifting Borrower Preferences
Nick Mendes of John Charcol brokers reported a clear shift in borrower behaviour over recent months. Many are now opting for two-year fixed deals instead of the five-year fixes that were once the default choice.
He explained that borrowers coming off fixed rates this year largely fall into two distinct groups: those concluding low five-year fixed rates from the pandemic era, and those ending two-year deals taken out after the rate peaks following the Truss-era market shocks.
With mortgage rates widely expected to continue their downward trend, many borrowers are choosing shorter-term fixes to lock in a lower rate now while keeping their options open to benefit from future rate cuts sooner.
