The average two-year fixed rate mortgage has risen from 5.26 per cent to 5.91 per cent in the year to May, research from Moneyfacts has revealed.
The research found average mortgage rates across two-year, five-year, and 10-year fixed have increased over the past 12 months.
This increase was driven by large rises in the six month period to November 2023 which saw the average two-year fixed rate rise to 6.29 per cent.
Moneyfacts finance expert, Rachel Springall, said: “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.
“The mortgage market continues to be fluid despite no change to the Bank of England base rate since August 2023, and market forecasts have pushed back imminent cuts, due to stubborn inflation.”
Springall added 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,” she continued.
“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 per cent so it’s much higher than the average two-year fixed rate.
“A typical mortgage being charged the current average SVR of 8.18 per cent would be paying around £290 more per month, compared to a typical two-year fixed rate.”
Springall advised that borrowers concerned about grabbing a new deal should seek advice from an independent broker, and any existing customers should speak to their lender if they are struggling with repayments.
tom.dunstan@ft.com
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