Average fixed rates soaring - Mortgages - News - Moneyfacts


Average fixed rates soaring

Average fixed rates soaring

Category: Mortgages

Updated: 19/06/2009
First Published: 19/06/2009

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Activity in the fixed rate mortgage market this week has been the most frantic for 12 months, with the average two year deal jumping by 0.16 per cent.

The average two year fixed rate mortgage has increased from 4.74 per cent on Monday to 4.90 per cent today. The average five year fixed deal has actually increased even more, from 5.61 per cent to 5.82 per cent – a five day jump of 0.21 per cent.

The figures come after last week's announcement from the Council of Mortgage Lenders that consumers are opting for fixed rate mortgage in their highest numbers for ten months.

Ray Boulger of John Charcol also recently warned: "The message for borrowers wanting to take a fixed rate is clear; get in now or miss out on the current relatively low rates."

Analyst at Moneyfacts.co.uk, Michelle Slade, commented: "After a period of relative calm in the mortgage market, lenders are stumbling over each other to increase fixed rate mortgages. The last time we saw such frantic activity was at the end of June 2008, when the average two year fixed reached a staggering 7.08 per cent.

"The recent increase can be attributed to the hike in swap rates that we saw a few weeks ago. Just like last time, lenders are quick to pass any increase in the cost of wholesale funding on, but are never quite as quick to reduce rates when the cost of funding declines.

"In June 2008, when the average rate hit its peak, the margin over swaps was 0.76 per cent. Today the margin is 2.35 per cent and it is hard to foresee anything other than the fixed rate increasing even further."

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

Related Articles

Does your mortgage lender owe you money?

Earlier this week, the financial watchdog revealed that hundreds of thousands of mortgage holders could have been overcharged by their lender. Are you one of the many who could be in line for a windfall?

Do you think your home will rise in value?

There’s been a lot of talk recently about the rate of house price growth slowing, but is it affecting your personal expectations? According to research, it could be, with fewer people now expecting the value of their property to increase.

Confidence among “second steppers” is on the rise

We all know how difficult it can be taking that first step on the ladder, but what about the second step? In many cases, getting onto the next rung can be just as challenging, but happily, confidence among this cohort appears to be on the rise.