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Two-year mortgage rates stand at 2.5% despite BoE rise – Moneyfacts

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  • 19/10/2018
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Two-year mortgage rates stand at 2.5% despite BoE rise – Moneyfacts
Two-year mortgage rates stood at 2.5% in October, despite the Bank of England rate hike in August.

 

The average two-year fixed has just slightly climbed compared to last month, according to the latest figures released by Moneyfacts.

In the last five business days, the average two-year mortgage rates have slightly risen by up to 0.03%.

However, the average two-year fixed rate has increased by up to 0.25% in the last 12 months, from 2.27% in October 2017 when it reached its lowest level.

The Bank of England kept the interest rates on hold in September, after raising the base rate to 0.75% in August.

Shaun Church, director of Private Finance, said that the reason behind this data may be related to the banks that are reducing their margins to be more competitive, whilst lenders are focused on remortgages to increase business share by the end of the year.

Ray Boulger, senior technical manager at John Charcol, said that these figures show the general trend, but it is more interesting to find out the overall average of two-year fixed products.

“These figures are not surprising as it is unlikely that before Brexit the BoE will change its rates. However, for clients it is more interesting looking at a comparison between fixed and discount rates, the latter a bit cheaper even though they may increase in the next couple of years.

“If we look at the cost of two and five-year fixed rates, the difference in interest rate is less than half a per cent.”

Mark Harris, chief executive of SPF Private Clients, said: “August’s hike in base rate was well-anticipated by the market with lenders pricing in a rate rise to their product ranges before it actually happened. Subsequently, there hasn’t been much movement in pricing since then, particularly as lenders are competing for business in the run up to the end of the year.

“We expect this trend to continue in the short term at least.”

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