According to the Moneyfacts UK Mortgage Trends Treasury Report, both fixed terms have reported the largest rate hikes since the company’s records began.
The average rate for a two-year fixed mortgage in July is 3.74 per cent, a 0.49 per cent rise on last month. This is also the ninth month running where two-year fixed rates have seen an increase.
The average rate for a two-year fix is also 1.4 per cent, up on the average rate recorded in December, when the Bank of England’s base rate increased from its record low of 0.1 per cent to 0.25 per cent. The average two-year rate is also the highest recorded by Moneyfacts since May 2013 when this sat at 3.8 per cent.
For a five-year fixed mortgage the average rate is now 3.89 per cent, which also marks the ninth consecutive month for increases. This is up 0.52 per cent on June and is 1.25 per cent higher than the average rate in December 2021. It is also the highest five-year fixed average rate recorded since November 2014, where the rate was 3.93 per cent.
Last year, the typical rate for a two-year fixed was 2.55 per cent while a five-year fixed rate mortgage was 2.78 per cent.
Variable rates tick upwards
Variable rates have also gone up.
The average two-year tracker mortgage rate is 2.74 per cent, a 0.2 per cent rise on last month and the highest rate recorded since June 2014 when it was 2.75 per cent.
Compared to December 2021, the average two-year tracker rate is up by 1.16 per cent, which aligns with the 1.15 per cent increase in the base rate over this period. During the same month last year, the typical rate was 2.28 per cent.
The average standard variable rate (SVR) has also breached five per cent for the first time in 13 years with a 0.15 per cent monthly rise recorded in July. This now sits at 5.06 per cent, compared to 4.40 per cent in December.
In July last year, the average SVR was 4.41 per cent.
The number of mortgage products dipped slightly to 4,556 in July compared to 4,512 in June. However, this is broadly in line with the 4,512 products on the market this time last year.
Eleanor Williams, spokesperson at Moneyfacts, said: “Product choice took another dip this month as mortgage lenders continue to revise their ranges in the face of ongoing economic uncertainty. We have seen some providers pull selected products, while others have withdrawn whole sectors of, or indeed their entire ranges, from the market temporarily.
“Compared to last month, total availability has reduced by a notable 431 deals to leave 4,556 mortgage products on offer to borrowers this month. This is just 44 more deals than were available this time last year, although at just 23 days the product shelf-life is seven days shorter than the 30 days this stood at in July 2021, reflecting the current pace of provider updates.
She added: “As product ranges have condensed, average fixed rates have continued on an upwards trajectory, with two- and five-year fixed averages at all loan to value (LTV) tiers rising this month.
“There are numerous factors which affect fixed rate pricing, rather than it simply tracking the Bank of England base rate. Providers take into account many influences, such as funding, swap rates, pricing pressures from other providers, and being able to maintain their service levels, among others.”
“While we remain in a cost-of-living crisis, with pressure on many household budgets, it’s vital prospective borrowers explore their options and are not disheartened by recent rate rises. There are products in our top tables with even more competitive rates still available, and therefore some could possibly reduce their outgoings on their mortgage by even more,” Williams said.
