It's been a turbulent time for the mortgage market of late, and as such our latest figures reveal a mixed picture in terms of rates. However, the variable sector is continuing on its upward trajectory with average rates having risen for the fifth consecutive month, which unfortunately suggests that the run of record low rates – in the variable sector at least – has categorically come to an end.
This month's figures show that the average two-year fixed mortgage rate has fallen by 0.01% to stand at 2.55%, down from 2.56% in March and just above the record low of 2.54% set in February. The average five-year fixed rate also fell, this time by 0.04% to 3.20%, which shows that those who wish to secure their mortgage repayments for longer can still source some fantastic rates.
However, it's a different story in the variable sector of the market, with the average two-year tracker rate having risen by 0.01% to stand at 2.08%. Unlike the fixed sector, there's been no let-up in its gradual rise since November 2015: the average tracker rate has risen by a significant 0.10% over the five-month period, up from the record low of 1.98% in November to the 2.08% of today, which in itself marks the highest rate seen in 12 months (it stood at the same 2.08% in April 2015).
At the same time, product availability in the variable rate sector has been steadily dropping, particularly in key loan-to-value (LTV) tiers. For example, the number of variable rate products in the 80% LTV tier has fallen by 72 since November to stand at 159, while the 75% LTV tier has lost 63 products (to 196) and the 85% LTV tier has recorded a 33-product drop (to 107).
The fixed rate sector has also suffered from product losses, but not to the same extent; in fact, the data shows that the number of variable mortgages available overall has fallen by 22% since November – down from 899 products to 701, a drop of 198 – compared with a 13.4% drop in residential mortgage availability as a whole.
Well, last month we discussed some of the risks being posed to the mortgage market, and it seems that the variable sector of the market has taken these to heart. Essentially, the various external factors affecting the market (such as employment issues, the health of the global economy and general economic uncertainty in the months ahead), are thought to be posing a big enough threat to affordability that providers have been forced to condense their product range and raise rates on the remaining deals, with the prolonged low-rate environment and even the threat of a base rate cut having little impact.
This is because the risk of falling discretionary income would hit those on variable rate mortgages the hardest, and as a result, any hint of a risk means that providers have to raise rates accordingly. In all likelihood, variable mortgage rates could continue on their upwards path, with a reversal to the record low rates of last year largely unexpected.
That's why it's so important to find the best deal while you can. If you've got the capacity to absorb any future rise in mortgage repayments, a variable rate deal could still be suitable, so check out our best buys and see if you can find the mortgage that's right for you.
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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.
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