Since the start of December 2021, the average two-year fixed mortgage rate has gone from 2.34 per cent to 5.65 per cent.
The average five-year fixed mortgage rate during that time has gone from 2.64 per cent to 5.65 per cent.
On the 10-year fixed mortgage rate side, average rates have risen from 2.97 per cent to 5.96 per cent.
The average standard variable rate (SVR) has increased from 4.4 per cent to 8.19 per cent during the same period.
The Bank of England started its cycle of 14 consecutive base rate increases in December 2021 in a move to combat rampant inflation.
‘Positive signs’ for mortgage rates
Rachel Springall, finance expert at Moneyfactscompare.co.uk, said that the past two years have proven to be “unprecedented period of interest rate volatility for mortgages”.
She continued: “Those coming off a fixed rate deal and wishing to fix once more will likely have to cover a much higher mortgage repayment, with the average two-year fixed rate more than double what it was in December 2021.
“The lingering cost of living crisis could also be playing havoc with first-time buyers’ ability to get a foot on the property ladder, and affordable housing remains in short supply. Borrowers feeling the squeeze would be wise to seek help before they fall behind on their repayments and lenders will need to work closely with customers to support them moving into 2024.”
Springall said that borrowers looking to lock into a fixed rate for “peace of mind” may be “sitting on the fence as they wait for rates to fall further in the weeks ahead”.
“However, any significant rate cut activity would typically be linked to a volatile swap rate market. The past few months have shown positive signs for mortgage pricing, so it is hoped that the fixed rate cut momentum continues into 2024.
“The incentive to switch from a variable rate is evident, with the average SVR resting above eight per cent. A typical mortgage being charged the current average SVR of 8.19 per cent would be paying around £275 more per month, compared to a typical two-year fixed rate (6.04 per cent),” she added.
