The average two-year and five-year fixed-rate mortgages are at their lowest level in six months, according to the latest analysis of mortgage trends by Moneyfacts.
Across all loan-to-values, borrowers can now expect to pay an average 5.32% for a two-year fix and 5% for a five-year fix, as rates continue to come down from the highs witnessed after the fall-out of last year’s mini-Budget.
However, the 0.32% gap between the two rates is the biggest it’s been for 15 years. The last time the margin between a two and a five-year fix was that big was in February 2008 when a gap of 0.36% was recorded.
While fixed rates are coming down, it’s a completely different story with standard variable rates (SVRs). At 7.12%, this has breached 7% for the first time since October 2008 and is now the highest since April of that same year, when it was 7.16%.
Moneyfacts says this could come as a shock to borrowers whose low fixed-rate deals are about to end.
Moneyfacts finance expert Rachel Springall comments: “Borrowers will be in for a shock if they are about to revert from a low fixed-rate deal. Indeed, the margin between the average two-year fixed-rate, taken out two years ago (2.57%), and the average ‘revert to’ rate (7.12%), stands at 4.55% in March, the largest margin on Moneyfacts records.
“Borrowers must therefore ensure they carefully consider the mortgage options available to them, particularly fixed rates, if they want peace of mind to secure their monthly repayments.”
The mortgage trends analysis also looks at availability of products, this month finding 4,372 variable and fixed-rate mortgages for people to choose from. This is a small rise since the February data, but almost double the low of 2,258 seen in October last year.
There’s also been a significant rise in products within the 60% LTV tier, from 51 to 657, giving borrowers much more choice in this area.
“The momentum in the residential mortgage market is positive, as fixed rates fell and product choice stabilised month-on-month. As the overall two and five-year fixed averages drop to their lowest levels in six months, borrowers who put their plans to remortgage on hold towards the tail end of last year may now be looking at the latest offers,” Springall adds.