Average rates for two- and five-year fixes continue downward trend
The average two-year fixed mortgage rate fell by 0.37% month-on-month – its biggest monthly fall since December 2022, according to financial information company Moneyfacts.
Its latest UK Mortgage Trends Treasury Report highlighted a continuous drop in average mortgage rates for both two- and five-year fixed rate deals over six consecutive months.
As of the beginning of February, the average rates for two- and five-year fixed mortgages stood at 5.56% and 5.18%, respectively. This puts the average two-year fixed rate at a 0.38% premium over its five-year counterpart.
Furthermore, the standard variable rate (SVR), often referred to as the ‘revert to’ rate, saw a marginal dip of 0.01%, settling at 8.17%. Meanwhile, the average rate for two-year tracker variable mortgages remained steady at 6.15%.
Moneyfacts: Biggest drop to two-year fixed mortgage rate since 2022.— Moneyfacts Press (@MoneyfactsPress) February 12, 2024
The average two-year fixed mortgage rate significantly fell month-on-month, by 0.37%.
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The Moneyfacts report also revealed a slight decrease in the overall number of mortgage products available to consumers, falling to 5,787 options. This marks the first time product availability has contracted since July 2023. Despite this overall reduction, the availability of deals with a 95% loan-to-value ratio reached its highest point since September 2022, offering 274 options.
Additionally, the average shelf-life of a mortgage product has increased to 28 days, the longest duration noted since February 2023.
“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,” commented Rachel Springall, finance expert at Moneyfacts.
“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.”
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