The UK’s average two-year mortgage rate has dipped below 6% for the first time in nearly six months.

The rate now sits at 5.99%, falling from 6.01% the day before, according to Moneyfactscompare.co.uk.

The last time the rate was below 6% was on 16 June 2023, when it dropped to 5.98%. The highest it has risen to is 6.68%, on 26 July.

The latest drop is thanks to lenders chopping their fixed rates amid signs that inflation is easing.

A Moneyfactscompare.co.uk spokesperson said: “Having peaked at 6.86% in late July, rates have been gently falling since early August due a combination of factors including falling inflation, base rate pauses, and reductions in swap rates (which lenders use to price fixed-rate mortgages).

“In recent weeks, a number of lenders have again begun to offer sub-5% two-year fixed deals; with lowest rates available UK-wide sitting around 4.75% at present.”

“It remains to be seen if the recent rate reductions will continue, as any further rises in inflation, base rate, or swap rates may lead to a reversal,” they added.

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Sarah Coles, head of personal finance at investors Hargreaves Lansdown, has said the rate drop “could help bring a chunk of buyers back to the market”.

She said: “It would be balm for the agony suffered by sellers over the past few months, as their properties sit unseen on the market and their for-sale signs collect grime.”

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However, Ms Coles also cautioned that we cannot expect to see the impact on house prices until next spring.

She continued: “There’s a good chance that the 6% threshold could be psychologically important for a number of buyers, who decide it’s a good time to take the plunge. It’s not going to be a seismic shift.

“Given that rates are expected to fall further from here – and that drops will accelerate once rate cuts are on the cards, there are plenty who will decide to wait and see.”

Ms Coles added that “in a property market this sluggish, an influx of new buyers will provide some welcome relief for those who have had their home on the market for months without interest.”

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