Average rates on two and five-year fixed mortgages have fallen to their lowest in six months as lenders continue to scale back from hikes in the summer.
Interest on five-year fixed rate mortgages fell 0.21% to 5.65% in December, Moneyfacts data revealed on Monday, while those on two-year deals sat 0.25% lower at 6.04%.
“These falls will come as good news to borrowers across the spectrum, including first-time buyers,” Moneyfacts finance expert Rachel Springall said.
Though the rates are over double that seen in December 2021, the latest reductions mean two and five-year fixed mortgages are at their cheapest since June, when banks had been quick to hike prices on fears base interest would climb higher than originally anticipated.
Subsiding inflation has since seen the Bank of England hold base interest at 5.25% in its last two rate calls, with lenders bringing down prices in response.
“Lenders will no doubt be working hard to meet their end-of-year targets right now,” Springall also pointed out.
“Indeed the average shelf life of a mortgage has fallen to 17 days, down from 20 days, so hopefully such vigorous repricing will result in better deals for borrowers.”
Nationwide Building Society and Banco Santander (LSE:BNC) were among those to cut rates late last week as competition between lenders continues.
Though each had opted to take rates on their five-year fixes further below the 5% mark, each included product fees of around £999 per deal.