According to the latest Moneyfacts figures, since November 2023, the average two-year fixed mortgage rate has decreased from 6.29% to 5.91%, and the average five-year fixed rate has fallen from 5.86% to 5.48%.
The report noted that these average rates have also risen from 5.80% and 5.39% respectively since last month.
For a 10-year fixed rate mortgage, the average rate has gone up from 5.75% to 5.97% since November 2023. The rate has increased from 5.77% since the start of April 2024.
The average standard variable rate (SVR) currently stands at 8.18%, a fall from 8.19% in November 2023. The rate has not changed since the start of April 2024.
Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “Borrowers may be disappointed to see fixed mortgage rates are on the rise. As has been the case since October 2022, the average five-year fixed mortgage rate remains below its two-year counterpart, which edges ever closer to 6%, not seen since December 2023.
“Lenders have been busy reviewing their fixed rate pricing in response to volatile swap rates, seeing month-on-month rises. However, fixed rates are lower than they were six months ago, so consumers who are now coming off a two- or five-year fixed mortgage would be wise to act quickly to grab a competitive deal, particularly as some lenders have withdrawn deals priced below 5%.”
She added that the mortgage market “continues to be fluid” despite no change to the Bank of England base rate since August 2023, and the expectation is that rate cuts will be delayed due to “stubborn inflation”.
‘Persistent lack of affordable housing’
Springall said: “Affordability continues to pose a challenge to buyers due to interest rates being higher than they may have expected this year, but also the persistent lack of affordable housing. This is having a notable impact on first-time buyers, who may have exhausted all their savings to raise a substantial deposit, and do not have the Bank of Mum and Dad to help them buy their first home.
“Those borrowers looking to remortgage may also face much higher repayments when they come off their deal, but they would still pay less with a fixed mortgage than on a revert rate, based on average rates. The average SVR stands above 8%, so it’s much higher than the average two-year fixed rate.”
She said that a typical mortgage being charged the current average SVR of 8.18% would be paying around £290 more per month, compared to a typical two-year fixed rate of 5.91%.
“Borrowers concerned about grabbing a new deal would be wise to seek advice from an independent broker, and any existing customers should speak to their lender if they are struggling with repayments,” Springall noted.
