Fixed rate mortgage fees rise and incentives fall – Moneyfacts

Fixed rate mortgage fees rise and incentives fall – Moneyfacts

According to Moneyfacts, product fees have increased to an average of £1,141, which is up from £1,095 in the same period last year and £1,073 in 2022.

The report continued that there were around 1,845 products with no product fee, equal to 35 per cent of the deals in the fixed rate market, which is a decrease from 43 per cent of the fixed rate market last year.

There were around 2,294 products with free or refunded legal fees, which accounts for 44 per cent of deals in the fixed rate market. This is roughly in line with figures from the prior year at 45 per cent, but is down from 49 per cent in 2022.

Deals with a free or refunded valuation came to 3,857, around 73 per cent of the fixed rate mortgage market. This compares to 75 per cent in 2023 and 72 per cent in 2022.

Cashback products made up a quarter of fixed products in 2024, equivalent to 1,320 products. This is a fall from 34 per cent in 2023 and 29 per cent in 2022.

The average rate for deals with a fee came to 5.94 per cent in 2024, up from 5.48 per cent last year and 3.2 per cent in 2022.

The average rate for products with no fee stood at 5.77 per cent, a rise from 5.59 per cent in 2023 and 2.93 per cent in 2022.

 

Borrowers should be aware of ‘true cost of any mortgage’ regarding mortgage fees

Rachel Springall, finance expert at Moneyfactscompare.co.uk, said borrowers worried about rising fixed mortgage rates “would be wise not to rush when comparing deals and ensure they consider the overall true cost package, as the average mortgage fee has crept up”.

She said: “There is an abundance of deals to suit different needs – some may be headline-grabbing rates, but these can also charge a high upfront fee. The best mortgage will come down to how much someone needs to borrow and for how long, so seeking independent advice to crunch the numbers is wise.

“Those borrowers looking to remortgage right now will find some of the lowest rates will cost them more than £1,000 in a product fee, but a mortgage with a slightly higher initial fixed rate and lower product fee could be a better package based on true cost.”

Springall said that mortgage interest rates were still volatile, and that may be the case for the next few weeks.

“However, even if borrowers lock into a rate that’s slightly higher than what may have been available a few weeks ago, borrowers could still get an attractive package by finding a deal that has some cost-saving incentives, a reasonable product fee, or no fee, and maybe even cashback.

“It would also be more cost-effective to move off a standard variable rate (SVR) and onto a fixed deal, based on average rates. First-time buyers might need to save on the upfront cost of their deal or opt for a mortgage that comes with a bundle of incentives, such as cashback. These packages may be more suitable if new buyers have exhausted all their savings on a deposit, removal and furnishing costs,” she added.

Springall said that most fixed rate mortgages would offer borrowers a free or refunded valuation incentive, and just under half of all fixed deals will cover legal fees.

Over a third do not charge a product fee, and some lenders allow borrowers to add it to the mortgage advance.

“These options can save borrowers on the upfront cost of their deal, but it’s vital to be conscious of the true cost of any mortgage before they apply,” she noted.

Two-year fixed mortgage rate sees largest monthly fall since 2022 – Moneyfacts

Two-year fixed mortgage rate sees largest monthly fall since 2022 – Moneyfacts

The Moneyfacts UK Mortgage Trends Treasury Report showed this was the biggest monthly fall since December 2022. 

It was the sixth consecutive month where declines in the average two- and five-year fixed rates were recorded, with the five-year fix falling from 5.55 per cent to 5.18 per cent. 

The average two-year fixed rate is currently 0.38 per cent higher than the five-year equivalent. 

This time last year, there was a 0.24 per cent differential between the two, with the average two-year fix standing at 5.44 per cent and the average five-year fix at 5.2 per cent. 

According to the Moneyfacts data, there was little change in the average variable rates in February. The average for a standard variable rate (SVR) came to 8.17 per cent in February, slightly down from 8.18 per cent in January. 

Compared to last year, this was significantly higher than the average SVR of 6.84 per cent. 

The average two-year tracker mortgage rate stayed the same month-on-month at 6.15 per cent, and was also notably higher than last year, when it was 4.39 per cent. 

 

Fewer deals on the mortgage market 

In February, Moneyfacts recorded 5,787 mortgage products on the market, which was slightly lower than the 5,899 available in January. 

This was the first monthly drop since July last year. 

There are still more products on the market than the last two years, as there were 4,341 in February 2023 and 5,356 during the same month in 2022. 

The average shelf life of a mortgage extended from 21 days in January to 28 in February. This is the highest figure since February last year. 

 

A constant review of rates 

Rachel Springall, finance expert at Moneyfacts, said: “Borrowers searching for a new mortgage deal may be delighted to know fixed mortgage rates continued their downward trend, with the average two-year fixed rate dropping by its biggest margin since December 2022. Those borrowers who have waited patiently in recent months to refinance, or indeed are preparing for when their mortgage deal expires, would be wise to review rates, as lenders are closely monitoring the volatile swap rate market, which tends to influence fixed rate pricing.  

“There have been big expectations for fixed rates to fall further, and whether now is the right time to refinance will come down to an individual’s circumstances. Lenders are in constant review of their ranges, and it is likely rates will fluctuate in the coming weeks due to the noises surrounding future rate expectations.” 

She added: “The recent observations made by the Bank of England (BoE) would suggest base rate is unlikely to move for a few months yet, and indeed the Monetary Policy Committee (MPC) will wait for firm evidence that inflation is under control before even considering a rate cut. Borrowers who are sitting on their SVR should be incentivised to switch their mortgage if they can, as it’s unlikely they will see their repayments drop for the foreseeable. Indeed, the average two- and five-year fixed rates are much lower than the average SVR.” 

Springall said first-time buyers would be “pleased” to know rates had fallen, adding that the average two-year fixed rate at 95 per cent loan to value (LTV) had fallen below six per cent for the first time since May 2023 to 5.94 per cent. 

She said this was “much lower than six months ago, when it was just over seven per cent”.  

Springall added: “Product choice has also increased at this LTV bracket and, while it’s a slight improvement month-on-month, it is encouraging and demonstrates lenders are still keen to support borrowers with small deposits. However, we have seen some product availability drop around other higher LTV brackets, at 90 per cent and 85 per cent month-on-month, so it will be interesting to see whether there will be further declines in these areas over the next few months, or if it’s a short-term adjustment.  

“Lenders are actively reviewing their ranges, so product choice could remain volatile, but borrowers must be quick to check deals as the average shelf life stands at 28 days, the highest in a year.” 

Mortgage product choice hits highest level in over 15 years – Moneyfacts

Mortgage product choice hits highest level in over 15 years – Moneyfacts

According to Moneyfacts, this is the highest level since Mach 2008 when there were 6,192 products on the market.

It is also an increase of 200 compared to December last year and is up from 3,643 in January 2023.

The availability of deals at 95 per cent loan to value (LTV) grew to its largest level since September 2022 at 270. This is an increase from 132 in January 2023 and from 253 at the end of last year.

At 90 per cent LTV, the number of products rose from 718 to 733 between December and January and is up from 435 in January last year.

The product count at 60 per cent LTV jumped from 623 to 682 month-on-month and is an increase from 484 in January last year.

The report continued that the average shelf life of a mortgage deal had gone up to 21 days, which is the longest timeframe since June 2023 when the shelf life stood at 22 days.

Regarding mortgage pricing, average mortgage rates for two and five-year fixed rates fell for the fifth month in a row.

The average two and five-year fixed rate came to 5.93 per cent and 5.5 per cent respectively, and the last time they dipped below six per cent was June 2023.

The average standard variable rate (SVR) now stands at 8.18 per cent, which is 0.1 per cent lower than December figures but up from 6.64 per cent in January last year.

The average two-year tracker variable mortgage rate contracted month-on-month to 6.15 per cent but is up from 4.48 per cent in the same period last year.

 

Higher number of products and better pricing ‘great relief’ for borrowers

Rachel Springall, finance expert at Moneyfacts, said consecutive reductions to the overall average two and five-year fixed rates would be of “great relief for borrowers looking to refinance this year”.

She continued: “The volatility surrounding mortgage rate pricing eased, as the average mortgage shelf life rose from 17 days to 21 days, the highest figure recorded in over six months. There are big expectations for fixed mortgage rates to fall in the coming weeks, so some borrowers may choose to wait patiently for the right time to change their deal or buy their first home.”

Springall said those comparing different mortgage offers may be “pleased to see a big uplift in choice”, as products experienced the largest month-on-month increase since September 2023.

“A rise in choice and cheaper mortgage rates are promising signs for those looking to refinance this year. However, those coming off either a two or five-year fixed mortgage will be paying around three per cent more on their mortgage, based on our average rates, when they lock into a similar term for peace of mind. Despite this, it would be cheaper than reverting to an SVR, which charge over eight per cent on average,” she explained.

Springall continued that those with a limited deposit or equity were “benefiting from an increase in product choice and lower mortgage rates”.

She said while the availability at 95 per cent LTV had increased to its highest level since September and the average two and five-year fixed rates were their lowest since June last year, if borrowers could stretch their deposit to 10 per cent they would “find greater choice and cheaper rates”.

“Consumers would be wise to seek advice to assess the latest offers based on true cost and not be swayed by a headline grabbing rate,” Springall concluded.

 

 

Mortgage product choice improves to 15-year high – Moneyfacts

Mortgage product choice improves to 15-year high – Moneyfacts

The Moneyfacts UK Mortgage Trends Treasury Report showed that this was up from the 5,338 mortgages on the market in September and more than double the 2,258 available a year ago just after the mini Budget. 

It was also higher than the 4,939 mortgages that were on the market in October 2021 when activity was stable. 

The average shelf life of a mortgage was stable at 16 days, compared to 15 days in September. 

Rachel Springall, finance expert at Moneyfacts, said: “The volume of deals in each sector has blossomed to a level not seen since before the fiscal announcement, deals at 90 per cent LTV are the highest since May 2023 (675), and deals at 95 per cent LTV are the highest since the start of September 2022 (274). 

“Across the whole mortgage market, product choice is at its highest level since March 2008 and the average shelf life rose slightly to 16 days, a sign the market is stabilising.” 

 

Dropping interest rates 

Average mortgage rates declined for the second month in a row, the Moneyfacts data showed. 

Reductions were noted across two and five-year fixed rates at all loan to value (LTV) tiers. 

The average two-year fixed rate was 6.47 per cent in October, down from 6.7 per cent in September. Meanwhile, the average five-year fixed rate fell from 6.19 per cent to 5.97 per cent. 

On average, rates for mortgages at 95 per cent LTV fell by 0.17 per cent month-on-month, while pricing fell by around 0.27 per cent at both 90 and 60 per cent LTV. This applied to both two and five-year fixes. 

The average two-year tracker rate also fell from September to October as the base rate was held at 5.25 per cent. 

This declined from 6.25 per cent to 6.17 per cent. It was still notably higher than the same month last year when the average two-year tracker rate was 3.77 per cent. 

Meanwhile, the average standard variable rate (SVR) rose from 8.09 per cent to 8.18 per cent from September to October. Compared to a year ago, this was higher than the average of 5.63 per cent. 

Springall added: “Fixed mortgage rates have fallen across the spectrum, signalling a positive change in the market. Overall, the average two and five-year fixed rates have now fallen for the second month running, so borrowers can find cheaper deals to choose from. These are encouraging signs for borrowers who may be looking for a new fixed rate deal, but they still may be on the fence about locking in, hoping rates will fall further in the weeks to come.  

 “One area of the mortgage market to feel a negative impact of rate rises month-on-month may well impact consumers who have or will fall off their fixed rate deal.” 

Moneyfacts said the average SVR was now at a record high and had risen by 3.78 per cent since December 2021. 

Buy-to-let fixed rates fall and product availability rises ‒ Moneyfacts

Buy-to-let fixed rates fall and product availability rises ‒ Moneyfacts

According to Moneyfacts, the total number of buy-to-let products has jumped from 988 in October last year to around 2,581 this year.

The number of products has also increased month-on-month from 2,475 in September this year to over 2,500 currently.

There has been significant growth in two-year fixed rates, which have increased from 183 in October last year to 773 at the moment.

Within that, two-year fixed rates at 60 per cent loan to value (LTV) nearly doubled from 35 to 67; at 75 per cent LTV deals rose from 84 to 379; and at 80 per cent LTV the count grew from 28 to 97 over the past year.

On the five-year fixed rate side, total products increased from 375 to 1,136 in the last 12 months, with significant growth at 75 per cent LTV.

At 75 per cent LTV, the product count has risen from 197 to 613 in the last year, and at 60 per cent LTV the product count has jumped from 36 to 81 in the same period.

Five-year fixed rates at 80 per cent LTV have gone from 52 in October last year to 85 currently.

 

BTL rates begin to fall

Moneyfacts said that fixed rates had started to tick down, with the average two-year fixed rate falling from 6.64 per cent in September to 6.4 per cent in October.

The average five-year fixed rate has fallen from 6.49 per cent in September to 6.32 per cent in October.

However, pricing remains elevated compared to last year, with the average two-year fixed rate pegged at 5.57 per cent and the average five-year fixed rate was 6.05 per cent.

Moneyfacts added that landlords coming off a five or two-year fixed rate and looking to remortgage will find the average rate at least three per cent higher than previously, with the average two-year fixed rate in October 2018 coming to 2.9 per cent and 2.92 per cent in October 2021.

The average five-year fixed rate in October 2019 was 3.4 per cent and in October 2021 it was 3.18 per cent.

 

‘Encouraging signs in buy-to-let market’

Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “The buy-to-let market has seen a healthy growth in product choice month-on-month and fixed rates have fallen over the same period.

“These are encouraging signs for landlords looking to refinance who may have been concerned about rates escalating.”

However, she said landlords coming off their two or five-year fixed rate deals would “need to find more funds to afford higher mortgage repayments”, as rates were much higher than when their initial deal was taken out.

Springall continued: “Borrowers with just a 20 per cent deposit or equity will find average rates across two- and five-year fixed terms have dropped below seven per cent this month and choice in this niche area of the market has grown.

“Landlords who have a larger deposit or equity of 25 per cent, and are prepared to lock into a five-year fixed mortgage, will find the average rate at 75 per cent LTV stands at its lowest point since June 2023 (5.85 per cent). Product choice for a five-year fixed deal at 75 per cent LTV stands at its highest point on record, with over 600 deals to choose from.”

Springall said that some landlords may “seriously be considering selling up, as the profitability of a buy-to-let portfolio may not be enough to cover costs”.

“Over the years, landlords’ profit margins have been hit by a cull in mortgage rate tax relief, tax changes for capital gains tax and holiday lets, plus new EPC requirements. The enticement to invest for new landlords is prevalent, as rental growth on a newly-let property hit 12 per cent across Great Britain, according to a study by Hamptons, which also cited the long-term decline in rental stock will continue to underpin future rental growth.

“The months ahead for the buy-to-let sector are crucial, so any investor would be wise to seek advice before they commit and be conscious of any rental expectations amid rising costs. Providers will need to carefully balance supporting their existing customers and work hard to entice new business to encourage an optimistic outlook for investors in the months ahead,” she noted.

YBS brings out sub-five per cent mortgage and cuts rates

YBS brings out sub-five per cent mortgage and cuts rates

The changes will come into force from 18 September, with rate cuts of up to 0.46 per cent applying to select products.

Its five-year fixed rate at 75 per cent loan to value (LTV) is 4.99 per cent with £1,495 fee. The purchase version comes with free standard valuation and remortgage is subject to free valuation and remortgage legal service.

The lender’s five-year fixed purchase rate at 85 per cent LTV is 5.24 per cent with £1,295 fee and free standard valuation.

The firm’s five-year fixed rate for remortgage at 85 per cent LTV is priced at 5.29 per cent. It also comes with a £1.495 fee, free standard valuation and free remortgage legal service.

Its two-year fixed purchase rate at 95 per cent LTV is 6.19 per cent with £1,495 fee and free standard valuation.

Ben Merritt (pictured), director of mortgages at Yorkshire Building Society, said: “Throughout the interest rate volatility of recent months, we’ve consistently endeavoured to seize every opportunity to pass on value to hard-pressed borrowers.

“This week, favourable market swap rates presented just such a window to reduce our mortgage costs, and offer the greatest incentive to those people who typically struggle the most, those with the lowest deposits to put down, including first-time buyers.”

Rachel Springall, finance expert at Moneyfacts, said: “It’s great to see such competitive deals launched by Yorkshire Building Society. Borrowers looking for a new low-rate mortgage will find the sub-five per cent five-year fixed deal is the lowest rate available in its sector.

“The incentive packages available across all the new deals today may also be popular with borrowers looking to save on the upfront cost of their mortgage.”

Residential and buy-to-let mortgage choice plummets by almost 800 deals in one week

Residential and buy-to-let mortgage choice plummets by almost 800 deals in one week

According to Moneyfacts figures, on the residential side Bank of Ireland, Bath Building Society, Furness Building Society, Newcastle Building Society, Halifax, Hinckley and Rugby Building Society, Kensington, LendInvest, Marsden Building Society, MPowered Mortgages, Principality Building Society, Scottish Building Society and Vernon Building Society pulled selected fixed mortgage products over the past few days.

It added that Aldermore, Foundation Home Loans and Tipton and Coseley Building Society have removed their entire fixed rate range.

Moneyfacts said that the total mortgage product count was still more than double the figure of 2,258 in October 2022, when the mini Budget led to mass product withdrawals.

It is also in line with figures from May last year when in total there were around 5,087 products on the market.

The firm added that the average rate for its two-year fix was 5.38 per cent, up from 5.34 per cent last year.

Its average five-year fixed rate comes to 5.05 per cent, up from 5.01 per cent last week.

Rachel Springall, finance expert at Moneyfacts, said: “Borrowers searching for a new deal may well be concerned about the latest developments in the mortgage market. Over the past few days, we have seen a few lenders withdraw selected fixed products, with some pulling out of the market, at least temporarily.

“Product choice has started to fall, and as may be expected, average fixed mortgage rates are on the rise. This volatility is down to the concerns surrounding future interest rate hikes, and lenders are reassessing propositions.”

She added: “Consumers looking to refinance will find rates around five per cent on average for a fixed deal, compared to around three per cent a year ago. It is vital borrowers seek advice to assess the situation and to find a mortgage that suits their circumstances.”

 

Buy-to-let choice contracts by over 400 in a week

Moneyfacts continued that buy-to-let product choice, which includes fixed and variable rate deals at all loan to value (LTV) tiers, had contracted from 2,748 last week to 2,343 currently.

This is down from 3,374 in May last year but up on the 988 products available in October last year.

Moneyfacts said Precise Mortgages, Kensington, Kent Reliance, Hodge and Marsden Building Society have pulled selected fixed buy-to-let mortgage products over the past few days.

Aldermore, Bank of Ireland, CHL Mortgages, Fleet Mortgages, Foundation Home Loans and The Mortgage Lender have withdrawn their entire fixed rate buy-to-let range.

The average two-year buy-to-let fixed rate is 5.61 per cent, up from 5.58 per cent this time last year.

On the five-year buy-to-let fixed rate side, the average rate stands at 5.52 per cent, a nudge up from 5.5 per cent last week.

Springall noted: “Landlords will be disappointed to see a drop in product choice and that average fixed rates are on the rise.

“The volatility surrounding interest rates towards the tail end of 2022 started to improve, but as it stands, average rates are expected to keep climbing because of the ongoing concerns over future interest rate hikes.”

She continued: “Buy-to-let product choice dropped below 1,000 deals in October last year, in the aftermath of the fiscal announcement, so it will be a concerning echo of that period if choice plummets to such a low again.

“Interest rates are only part of the decision-making process when entering a buy-to-let investment, so it is always wise to seek advice to ensure it is the right time to commit to a deal.”

Signs of market stability as mortgage choice hits 15-month high and rates fall – Moneyfacts

Signs of market stability as mortgage choice hits 15-month high and rates fall – Moneyfacts

The Moneyfacts UK Mortgage Trends Treasury Report revealed there were 5,264 mortgage options on the market, the highest number of products since February 2022 when there were 5,356 deals. 

There are also more than double the number of mortgages available now than there were in October last year, just after the mini Budget and subsequent fallout. 

The number of mortgages on the market in May was up from 5,416 in April and 5,087 during the same month last year. 

Moneyfacts also found that product choice at the 75 and 85 per cent loan to value (LTV) tiers was at the highest on record. 

Options at higher LTVs were slightly down when compared to last year, with 212 mortgages at 95 per cent LTV compared to 369 a year ago and 675 options at 90 per cent LTV, compared to 692. 

Mortgages at 95 per cent LTV rose slightly from 204 in April, but options at 90 per cent LTV fell slightly from 684. 

Product count at 60 per cent LTV came to 676 in May, which was down on April’s 702 options but an improvement from last year when there were 580. 

The average shelf life of a mortgage improved from 21 days in April to 25 days in May, and was better than the 21-day average recorded last year. 

Rachel Springall, finance expert at Moneyfacts, said the mortgage market was showing “positive signs of resilience and growth”. 

 

Falling rates 

Fixed rates declined across the board from April to May, with the average two-year fix priced at 5.26 per cent compared to 5.35 last month, and the average five-year fix is 4.97 per cent down from 5.05 per cent. 

Fixed rates are still considerably higher than they were last year, when the average two-year fix was 3.35 per cent and the average five-year fix was 3.17 per cent. 

The average standard variable rate (SVR) rose, reflecting the consecutive increases to the Bank of England’s base rate. Across all LTVs, the average SVR stood at 7.37 per cent in May, up from 7.3 per cent last month. 

The average two-year tracker rate also increased from 5.02 per cent in April to 5.07 per cent in May. 

Springall added: “As was widely anticipated, variable rates continued to rise, but fixed mortgage rates rest lower on a month-on-month basis.  

“Promising as these signs may be, it is anticipated fixed interest rates will start to rise due to volatile swap rates, and for the eighth month running, the average five-year fixed mortgage rate rests lower than the two-year equivalent.” 

She said borrowers coming off a fixed rate deal may be “understandably concerned” about the difference between their existing rates and current pricing. 

Springall said: “In May 2021, the average two-year fixed mortgage rate stood at 2.57 per cent, it is now more than double that. Those on a longer-term fixed mortgage may note the average five-year fixed mortgage rate in May 2018 stood at 2.91 per cent but is now over two per cent higher.” 

Residential mortgage availability breaches 5,000 for first time in over a year

Residential mortgage availability breaches 5,000 for first time in over a year

Moneyfacts registered the highest product count since February last year, when the number of deals was pegged at 5,356.

Within loan to value (LTV) tiers, at 60 per cent LTV product counts rose from 529 last year to 702 this year. Moneyfacts said that this was the highest level on  record.

The number of products at 85 per cent LTV rose to 806 deals, also the highest level on Moneyfacts records.

At 90 per cent LTV the increase year-on-year was from 665 to 684, and at 95 per cent LTV products numbers fell from 367 to 204.

The average two and five-year fixed rates rose between the beginning of March and April to 5.35 per cent and 5.05 per cent respectively.

The margin between the average two-year fixed rate is 0.3 per cent higher than the average five-year equivalent.

The average two-year tracker variable mortgage rate increased 0.18 per cent month-on-month and breached five per cent for the first time in 14 years at 5.02 per cent.

The average standard variable rate has gone up to 7.3 per cent, the highest rate since February 2008 when it stood at 7.31 per cent.

 

Product choice ‘positive across the market’

Rachel Springall, finance expert at Moneyfacts, said that the number of mortgage products had risen to its “highest point in over a year, boosting choice for consumers comparing deals and sets a positive movement across the market”.

“The encouraging rise in products comes around six months on from the unprecedented uncertainty surrounding interest rates following the fiscal announcement.

“The month-on-month rise in products was a significant 774 options, and several LTV brackets experienced a rise, including deals at 95 per cent LTV which has breached 200 deals for the first time since September 2022 at 274,” she added.

Springall continued that interest rate competition among lenders was “mixed month-on-month”, but it is “widely expected” that fixed mortgage rates will fall over the next few months. This would be determined by “fluctuating swap rates and lenders’ business appetite”.

“Those borrowers with a large deposit or equity may be pleased to see the average rates at 60 per cent LTV for a two-year or five-year fixed mortgage stand below five per cent. However, those who are coming off a two-year fixed mortgage and wish to refinance on the same term at 60 per cent LTV may wish to note the average rate on a two-year fixed mortgage in April 2021 was 1.63 per cent, compared to 4.95 per cent for April 2023,” she noted.

Springall continued that variable interest rates had been “steadily…rising”, partially due to the base rate increasing to 4.25 per cent. This led the average SVR to hit its highest rate since 2008 and average two-year tracker breaching five per cent for the first time in 14 years.

“Borrowers comparing both rates and the overall mortgage packages would be wise to seek independent financial advice to assess the true cost of any deal, and to ensure it’s the right time for them to refinance,” she said.

Average fixed mortgage rates drop to six-month low – Moneyfacts

Average fixed mortgage rates drop to six-month low – Moneyfacts

 

The Moneyfacts UK Mortgage Trends Treasury Report found that the average rate for a two-year fix stood at five per cent in March while the average five-year fix had a rate of 5.32 per cent. 

Compared to February, this is down from an average two-year fixed rate of 5.44 per cent and an average five-year fixed rate of 5.2 per cent.  

 

Widening rate gap 

The last time the average rate for a two-year fix was this much higher than a five-year fix was in February 2008, when there was a 0.36 per cent gap between the two options. 

The difference between a two and five-year fixed rate is wider at higher loan to value (LTV) lending tiers. For example, the average rate for a two-year fix at 95 per cent LTV is 5.85 per cent, compared to a five-year fix which is 5.33 per cent, representing a 0.52 per cent gap. 

At 60 per cent LTV, the average two-year fix is priced at 5.01 per cent, while a five-year fix is 0.25 per cent lower at 4.76 per cent. 

Meanwhile, the average standard variable rate (SVR) has steadily risen and is now 7.12 per cent. It is the first time since October 2008 that the SVR has breached seven per cent, and the highest rate since April 2008 when it stood at 7.16 per cent. 

Borrowers who took out a two-year fixed mortgage two years ago would now be facing the largest rate increases recorded by Moneyfacts. In March 2021, the average two-year fixed mortgage rate was 2.57 per cent and the average SVR was 4.55 per cent. 

Average two-year tracker rates have also increased and came to 4.84 per cent in March, up from 4.39 per cent in February. Rates are also higher than last year, when the average two-year tracker was priced at 2.03 per cent. 

 

Product choice 

There are currently 4,372 mortgages on the market, 466 fewer products than at the same time last year. However, options have markedly recovered since October 2022 just after the mini Budget, when there were only 2,258 mortgages available. 

Numbers are also better than March 2021 when there were 3,532 mortgages on the market. 

Mortgage options are slightly up on last month too when there were 4,341 products available. 

High LTV mortgage choices have not recovered as quickly as low LTV counterparts, Moneyfacts data showed. 

There are 161 mortgages at 95 per cent LTV compared to 342 this time last year. It is up from 149 last month but not massively improved from 132 in October, after the mini Budget. 

There are currently 546 options at 90 per cent LTV, down from 678 last year. This is up slightly from 539 in February and better than the 295 products in October 2022. 

Meanwhile, there are 657 mortgages at 60 per cent LTV up from 606 in February. This is higher than the 531 mortgages at the same tier in March 2022, and the 337 options in October. 

Rachel Springall, finance spokesperson at Moneyfacts, said: “The momentum in the residential mortgage market is positive, as fixed rates fell and product choice stabilised month-on-month. Lenders have continued to reduce fixed rates, with the average five-year fixed rate resting below the equivalent two-year.  

“Rate competition among lenders has been more focused on longer-term fixed mortgages. As the overall two and five-year fixed average rates drop to their lowest levels in six months, borrowers who put their plans to remortgage on hold towards the tail end of last year may now be looking at the latest offers.”