Average two-year fixed mortgage rates in Britain have fallen below 4% for the first time in more than a year, Reuters reported, as lenders adjusted pricing to reflect lower swap rates and growing expectations of a Bank of England rate cut.

The move marks a notable shift for borrowers after a prolonged period of elevated housing costs. Lenders have been trimming offers in recent weeks, with market pricing increasingly pointing to softer borrowing conditions if the central bank eases policy.

For homeowners and first-time buyers, lower mortgage rates could ease monthly repayments and improve affordability, though the benefits will depend on the size of the loan, deposit levels and the wider direction of inflation and interest rates.

The latest drop suggests mortgage markets are responding quickly to changing economic signals, even as households continue to face pressure from the long tail of higher living costs.