Moneyfacts: Mortgage rates drop as product choice soars

Average mortgage rates are close to a three-year low and product choice has soared as buyers benefit from relaxed stress tests on loan applications, Moneyfacts claims.

The latest figures from the data brand show average mortgage rates on the overall two- and five-year fixed rates fell by 0.03% and 0.01% to 5.09% and 5.08%, respectively as of the start of July 2025.

The average two- and five-year fixed rates were last lower in September 2022 (4.24%) and October 2024 (5.07%) respectively.

At the start of July 2024, the average five-year fixed rate was 5.53%; compared to the start of this month, the rate is 0.45% lower at 5.08%. However, the average two-year fixed rate has fallen by 0.86% over the same period, down from 5.95% to 5.09%.

Product choice has also increased overall month-on-month, to 6,908 options, up year-on-year (6,658 – July 2024), outside of May 2025 (6,993), this was last higher in October 2007 (7,421).

Rachel Springall, finance expert at Moneyfacts, said:

“The growth in overall product availability creates a positive sentiment, and reaffirms the more calming churn of mortgage ranges by lenders. This stance is far beyond the upheaval endured by the mortgage market two years ago, when there was a drop of 571 products between the start of June and July 2023, the biggest plummet since the ‘mini-Budget’ which caused unprecedented chaos around both product choice and mortgage interest rates.

“Borrowers will not want to see a repeat of such upheaval, especially first-time buyers. Those worried about the end of the Mortgage Guarantee Scheme will find negligible impact in the choice of mortgages at higher LTVs, and the Government is due to announce a new replacement this month. In the meantime, the calls for lenders to do more have not been ignored, with relaxation in stress tests underway, but there is still no news on changing the loan-to-income (LTI) rules. There needs to be more progress to support first-time buyers, who remain the lifeblood of the mortgage market and to get mortgage prisoners switching deals. It is essential borrowers seek advice to navigate the latest deals available to them.”

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