SVR mortgages hit 13-year high: Moneyfacts

The average standard variable rate in June jumped to 4.91%, its highest rate in 13 years after a series of base rate hikes, according to the latest Moneyfacts UK Mortgage Trends Treasury report.

Average standard variable rates rose 13 basis points this month from May and jumped 51 basis points from last December, when the Bank of England began a series of five consecutive rate hikes. basis, bringing them to 1.25% against 0.1%.

The dataset says the average standard variable rate is now its highest since February 2009, when it was 4.94%, beating the pre-pandemic average rate of return at 4.90% in March 2020.

The report adds that for the eighth consecutive month, the overall two-year average fixed rate has increased. At 3.25%, the overall average two-year fixed rate is up 22 bps since last month and 91 bps since last December. The highest rate posted since November 2014 when it was 3.31%.

The overall five-year fixed rate average now stands at 3.37% after a monthly increase of 20 basis points, a seven-year high since June 2015, when it reached 3.38%, and 73 basis points. basis more than the equivalent rate last December. The study says this means the spread between average two- and five-year fixed rates is down to just 12 basis points – the smallest spread since February 2013.

The report adds that the two-year average tracker rate climbed to 2.54%, an increase of 27 basis points from last month and a rise of 96 basis points from the equivalent rate last December where it was 1.58%. This is the highest level recorded since September 2014, when it was 2.61%.

Moneyfacts finance expert Eleanor Williams says: “Between early December 2021 and early June 2022, the Bank of England raised the base rate by a total of 90 basis points. 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 constantly changing, which means that some offers may not be available for long before they are withdrawn or changed.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 rose again this month, now at 2.54%, representing a 96 basis point increase from December 2021 and the highest in nearly eight years ( when in September 2014 it reached 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 91 basis points and 73 basis points respectively over the past six months. The margin between these two rates is now only 12 basis points, the smallest gap since February 2013.

“Average rates for those with higher capital or deposit levels have seen some of the largest increases, which may come as a surprise as products at this end of the loan-to-value spectrum have traditionally been cheaper, in part by because of the lower risk of default they tend to pose for suppliers.

“At 65% LTV, the average two- and five-year fixed rates increased 57 basis points and 47 basis points month-on-month to stand at 3.55% and 3.77% respectively. – increases of 89 basis points and 90 basis points compared to equivalent rates in December 2021, after increasing at about the same pace as the Bank of England’s key rate hike 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 have increased to 2.91% and 3.05% this month, that is 1.25% and 1.12% above where they sat in December 2021 (at 1.66% and 1.93% respectively).

“Interestingly, it’s only the 90% and 95% LTV levels (so often favored by first-time buyers) where the average two- and five-year fixed rates remain lower than they were at the start. same time last year, which may give hope to those looking to step up the homeownership ladder.While many consumers struggle with the current cost of living crisis, it remains to be seen how everything further change in the market will affect potential mortgage borrowers.

“The average standard floating rate of 4.91% is the highest recorded in over 13 years (from 4.94% in February 2009%), having increased by 51 basis points since December 2021. difference between the average standard variable rate and the two-year average rate The fixed rate was 2.06% in December 2021, and in recent months this gap has narrowed to 1.66% as lenders react to the changing economic landscape.

“However, the motivation to enter into a new deal remains clear, as those eligible could still potentially realize significant savings and gain peace of mind with a new fixed deal.”

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