Average mortgage rates have fallen for the first time in months.

Both two and five-year fixed-rate deals have dropped, according to data from financial information company Moneyfacts.

The average rate on a two-year fixed deal is now 6.79%, down from 6.81% on Wednesday, while the average five-year rate dipped to 6.31%, a decrease from 6.33% on the day before. The majority of UK mortgage holders are on fixed rate deals.

More than 400,000 people were expected to move off existing fixed deals between July and September, meaning they are likely sign up to higher monthly mortgage bills.

Fixed mortgage rates haven’t fallen since the spring.

Click to subscribe to the Sky News Daily wherever you get your podcasts

Not every average mortgage rate has decreased. The average two year tracker mortgage rate is the same as on Wednesday, 6.03%.

Improved interest rate outlook should filter through into mortgages prices quickly

Inflation falls to 7.9% in bigger than expected drop

Higher interest rates could be good news for young people, thinktank says

Be the first to get Breaking News

Install the Sky News app for free

Behind the decrease is the surprise drop in the rate of inflation, which led to lower interest rate forecasts.

It’s now expected that the Bank of England will need to do fewer base interest rate hikes to bring inflation to its 2% target.

Prior to the inflation announcement the Bank’s base interest rate had been expected by some to exceed 6% but is now estimated to peak at 5.75%.

Please use Chrome browser for a more accessible video player

The lower expected rate is now being priced in by mortgage lenders.

Overall, the mortgage bills for anyone who has recently agreed a new fixed rate are still up markedly from the years of ultra low interest rates. Less than two years ago, in October 2021, the average rate on a five year deal was just 2.55%.

More than 2.4 million fixed-rate deals were set to expire from summer to the end of 2024, the banking industry trade body, UK Finance, said.

Related posts:

July inflation measure usually used to set annual rail fare rises is highest in ten years Travel hopes, retail slump, four-day week Treasury paves way to compensate Post Office scandal’s forgotten 555 Sub-postmasters who launched Horizon scandal legal fight secure extra compensation Bitcoin rallies slightly but still set for record losing streak Shapps to hold crunch talks with British Steel owner amid spectre of mass job cuts Global turbulence, retirement and bugs turning food waste into pet food Hunt insists reducing inflation ‘remains government’s focus’ amid global banking volatility COVID testing tsar Sir John Bell quits board of Oxford spinout vehicle OSE More Amazon strikes on the cards after ‘insulting’ pay rise CBI hands new information to police after report of ‘serious criminal offence’ Facebook owner Meta expected to be hit with record privacy breach fine