Fixed rates continue to rise at record pace: Moneyfacts

As vendors continue to revise and reassess their product lines, overall two- and five-year average rates have risen sharply this month, according to the latest data from Moneyfacts.

The latest Cash Trends Mortgage Report from Moneyfacts UK shows the two have seen the biggest monthly increases since 2007 when it started recording data.

The two-year average global fixed rate rose for a ninth consecutive month.

At 3.74%, the overall two-year average fixed rate rose 0.49% month-on-month.

The data revealed that it was up 1.40% from December last year (2.34%), the highest Moneyfacts has recorded since May 2013, when it stood at 3, 80%.

At 3.89%, the overall five-year fixed rate average has also risen for nine consecutive months and is the highest recorded by Moneyfacts since November 2014, when it reached 3.93%.

After a monthly increase of 0.52%, this rate is now 1.25% higher than the equivalent rate recorded last December when it reached 2.64%.

The two-year average tracker rate rebounded to 2.74% after rising 0.20% from last month and is now the highest on record since June 2014.

Since December of last year, this average rate has increased by 1.16%, which is broadly in line with the base rate of 1.15% which has increased during this period.

The average standard variable rate (SVR) crossed the 5% mark for the first time in more than 13 years, after hitting 5.06%.

Compared to December 2021 (4.40%), before the first of recent base rate hikes, the base rate increased by 0.66%.

However, at 5.06%, it is now the highest rate recorded by Moneyfacts since January 2009, when it was 5.14%.

Commenting on the latest figures, Moneyfacts financial expert Eleanor Williams said: “Product choice has fallen further this month as mortgage lenders continue to revise their ranges in the face of the current economic uncertainty.”

“We have seen some suppliers withdraw selected products, while others have temporarily removed entire sectors, or even their entire ranges, from the market. Compared to last month, total availability has been reduced by 431 notable offers to leave 4,556 mortgage products available to borrowers this month. »

“This is only 44 more offers than there were at this time last year, although at just 23 days the shelf life of the product is seven days shorter than the 30 days in July 2021, reflecting the current pace of vendor updates.”

“As product lines have condensed, average fixed rates have continued on an upward trajectory, with two- and five-year fixed averages at all loan-to-value (LTV) levels increasing this month.”

“There are many factors that affect fixed rate pricing, rather than just following the Bank of England base rate. Providers consider many influences, such as funding, exchange rates, pricing pressures from other providers, and the ability to maintain their service levels, among others.

Speaking on SVRs, Williams adds: “While the difference between this rate and average fixed rates has narrowed in recent months, for eligible borrowers about to fall on a return rate, the incentive to conclude a new fixed agreement is always clear. Those switching from the average SVR to the current two-year average fixed rate could see monthly savings of almost £150. »

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