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Small rise in fixed mortgage rates as options widen – Moneyfacts

  • 08/04/2024
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Small rise in fixed mortgage rates as options widen – Moneyfacts
There has been a modest rise in average two- and five-year fixed mortgage rates since last month and there are more products on the market, analysis from financial data firm found.

The Moneyfacts UK Mortgage Trends Treasury Report data showed that the month-on-month rise in average mortgage rates in April was lower than the change recorded in January. 

Between the start of March and the start of April, the average two-year fixed rate increased from 5.76% to 5.8%. Meanwhile, the average five-year fixed rate rose from 5.34% to 5.39%. 

Across lower loan-to-value (LTV) tiers, the average two-year fixed rate for a 60% deal increased from 5.23% to 5.29%, while the average five-year fixed rate went up from 4.86% to 4.95%. 

At 90% LTV, the two-year fixed rate averaged at 6.04% in April, up from 5.99% in March. The average five-year fixed rate was unchanged at 5.49%. 

The average two-year fixed rate for a 95% LTV deal was 6.03%, up from 5.99% the month before. For a five-year fix at 95% LTV, the average rate rose from 5.46% in March to 5.53% in April. 


Stable variable mortgage rates 

There was little change in variable mortgage rates, as the average standard variable rate (SVR) was unchanged at 8.18% and the average two-year tracker rate fell slightly from 6.15% to 6.14%. 

Rachel Springall, finance expert at Moneyfacts, said: “Fixed mortgage rates have continued on an upward trajectory, but the rises to the overall average two- and five-year fixed mortgage rates were much more modest. The volatility surrounding the shelf life of mortgage products also stabilised. These are encouraging signs for borrowers concerned about rising interest rates and the short window of opportunity to secure a new deal. It is worth noting that both the average two- and five-year fixed rates are lower than they were back at the start of 2024. Borrowers will find rates are significantly lower compared to six months ago, when the average two- and five-year fixed rates were 0.67% and 0.58% higher respectively. 

“Despite rising fixed rates, the incentive to refinance with a fixed rate mortgage is a sensible option when the average SVR is over 8%. However, borrowers who will come off a two- or five-year fixed rate this year may be paying between 2.5% and up to 3% more in interest on their mortgage on average. Indeed, in April 2022, the average two-year fixed mortgage rate was 2.86%, and in April 2019, the average five-year fixed mortgage rate was 2.88%.” 


More mortgage choice 

More than 300 mortgage products came to market between March and April as the product count increased from 6,004 to 6,307 across all LTVs. 

This was also higher than last year, when there were 5,146 mortgages on the market. 

The biggest rise recorded by Moneyfacts was across the 60% LTV tier, where the number of products available increased from 677 to 723.

There were more high-LTV options too, with 90% LTV products rising from 761 to 774, and the 95% LTV offering increasing from 318 to 335. 

The average shelf life of a mortgage also increased to 22 days, compared to 15 days in March.


Good news for first-time buyers 

Springall added: “Mortgage product availability continues to thrive, with the overall choice of residential products reaching its highest point in over 16 years. Deeper analysis shows that the number of deals available at higher LTV ratios rose. Indeed, at 90% LTV, the number of deals increased for a consecutive month, as did deals at 95% LTV. There are now 1,109 deals at these ratios combined, positive news for borrowers with a limited deposit or equity.

“The growth in choice is good news for first-time buyers, who may be struggling to find an affordable property. Those with limited deposits will find the cost to borrow at higher LTVs across the two- and five-year fixed rates rose month-on-month, with the average two-year fixed rates at 90% and 95% breaching 6%.” 

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