The average fixed rate over two years has reached its highest level for eight years
“While fixed rate pricing does not automatically change with changes to the Bank of England’s base rate, the overall average two- and five-year fixed rates have also increased significantly over this period.”
At 3.25%, the overall average two-year fixed rate has risen 0.22% since last month and 0.91% since December 2021. This is now the highest rate recorded by Moneyfacts since November 2014 (3.31%).
The five-year average fixed rate stands at 3.37% after a monthly increase of 0.20% and is the highest recorded in seven years (June 2015 – 3.38%), 0.73% higher than the equivalent rate in December 2021. This means that the margin between the average two- and five-year fixed rates is now just 0.12% – the smallest difference since February 2013.
The two-year average tracker rate climbed to 2.54%, up 0.27% from last month, and up 0.96% from the equivalent rate in December 2021 (1.58% ). This is the highest recorded since September 2014 (2.61%).
The average Standard Variable Rate (SVR) reached 4.91% this month after rising 0.13% from the equivalent rate last month, and 0.51% since December 2021. It is now from the highest recorded since February 2009 (4.94%), exceeding the pre-pandemic average returns to a rate of 4.90% (March 2020).
Eleanor Williams, finance expert at Moneyfacts, said: “Between early December 2021 and early June 2022, the Bank of England had raised the policy rate by a total of 0.90%. Since then there have been fluctuations in the availability of mortgage products, this month dropping by 100 products to leave 4,987 offers for potential borrowers to choose from. This is a decrease of 328 from December 2021, although the level of choice in the market remains up from the previous year. However, our latest data also shows that product shelf life fell back to an all-time high of 21 days this month as suppliers continue to adjust their offerings and condense their ranges in light of an economic backdrop. constantly changing, which means that some offers may not be available for long before they are withdrawn or changed.
“The overall two-year follow-up rate increased again this month, now at 2.54%, which represents an increase of 0.96% from December 2021 and the highest in almost eight years ( September 2014 – 2.61%). Although fixed rate pricing does not automatically change with changes to the Bank of England’s base rate, the overall average two- and five-year fixed rates have also increased significantly over this period. At 3.25% and 3.37%, these rates have increased by 0.91% and 0.73% respectively over the past six months. The margin between these two rates is only 0.12 %, the smallest gap since February 2013.
“Average rates for those with higher equity or deposit levels have seen some of the largest increases, which may come as a surprise as products at this end of the LTV spectrum have traditionally been cheaper, in part due lower risk of default. they tend to pose for providers. At 65% LTV, two- and five-year average fixed rates rose 0.57% and 0.47% month-over-month to settle at 3.55% and 3.77%, respectively, increases of 0.89% and 0.90% from the equivalent rates in Dec. 2021, after rising roughly in line with the rise of the Bank of England’s base rate over the same period. It is at 60% LTV that we have seen the largest rate increases in the two- and five-year averages since December 2021. These equivalent rates are rose to 2.91% and 3.05% this month, 1.25% and 1.12% above their level. e 2021 (1.66% and 1.93% respectively).
“Interestingly, it’s only the 90% and 95% LTV levels where the two- and five-year average fixed rates remain lower now than they were at this time last year, which may give hope to those looking to leap the property ladder.While many consumers struggle with the current cost of living crisis, it remains to be seen how any further changes in the market will affect mortgage borrowers. potentials.
“The average SVR rate of 4.91% is the highest recorded in over 13 years (February 2009 – 4.94%), having increased by 0.51% since December 2021. The difference between the average SVR and the The average two-year fixed rate was 2.06% in December 2021, and in recent months that difference has narrowed to 1.66% as lenders react to the changing economic landscape. However, the motivation for securing a new deal remains clear, as those eligible could still potentially realize significant savings and gain peace of mind with a fixed new deal.