Fixed mortgage rates have been on the rise in recent months, according to a Moneyfacts analysis. The research found that the average two-year fixed mortgage rate has increased by 0.14% since the start of 2021, while the average five-year fixed rate has risen by 0.18%.
The analysis also revealed that the average two-year fixed rate is now at its highest level since October 2020, while the average five-year rate is at its highest level since July 2020. The increases come despite the Bank of England’s base rate remaining at its historic low of 0.1%.
The Moneyfacts analysis found that the average two-year fixed rate now stands at 2.43%, up from 2.29% at the start of 2021. The average five-year fixed rate has risen to 2.81%, up from 2.63% at the start of the year.
The research also revealed that the number of two-year fixed mortgage deals available has dropped by 4% since the start of 2021, while the number of five-year fixed deals has fallen by 3%.
Commenting on the findings, Rachel Springall, finance expert at Moneyfacts, said: “It’s clear to see that lenders are continuing to increase their fixed mortgage rates in response to the current market conditions. This means that borrowers looking to fix their mortgage rate for two or five years will have to pay more than they would have done at the start of the year.
“However, it’s important to remember that even though rates have increased, there are still some competitive deals available. Borrowers should always shop around to find the best deal for them, as there may be a better option out there.”
The Moneyfacts analysis comes as the UK housing market continues to boom, with house prices rising at their fastest rate since 2014. This is likely to be a factor in lenders increasing their fixed mortgage rates, as they look to protect themselves from any potential risks in the future.
It’s important for borrowers to bear in mind that fixed mortgage rates are likely to remain volatile in the coming months, so they should always compare deals and shop around for the best option available.