Rate watch: Five-year fix drops four basis points

The average five-year fixed rate has fallen by four basis points, dropping from 2.83% to 2.79%, according to data collected by Moneyfacts.

Looking at the average two-year fixed rate, it has fallen for the first time since the start of July, dropping to 2.47%. This time last year the average two-year fixed rate was seven basis points higher at 2.54%.

Average rates in the 60% LTV category and the 70% LTV category both fell, from 1.86% to 1.85%, and from 2.58% to 2.55%, respectively.

In addition, average rates in the 75% LTV category declined from 2.36% to 2.35%, and average rates in the 80% LTV category dropped from 2.46% to 2.45%.

The average rates in the 85% LTV category also fell, from 2.49% to 2.47%, and in the 95% LTV category from 3.24% to 3.23%.

Meanwhile, average rates in the 65% LTV category and the 90% LTV category remained unchanged.

Moneyfacts finance expert Darren Cook says: “Average rates have dropped across the board this week. Swap rates have fallen, which has had a knock-on effect.

“The average five-year swap rate is now lower than the average two-year swap rate, 0.63% and 0.68%, respectively.

“Lenders are narrowing the gap between the average two- and five-year fixed rates in order to encourage customers to move to a longer-term mortgage.”