Top Mortgage News

Derin Clark

Derin Clark

Online Reporter
Published: 23/08/2019

In just the last three weeks the average five-year fixed rate mortgage has fallen from 2.84% to 2.79%, research by Moneyfacts.co.uk found. In addition to this, the gap between the average two and five-year fixed mortgage rates has fallen to 0.325%, a drop of 0.03%, over the same period. For borrowers, this means that five-year fixed rate mortgages are becoming more competitive and signals good news for those wanting the security of locking their mortgage rate into a five-year term.

Homeowners looking to lock their mortgage rate into a term longer than five years will be able to benefit from more competition in the market.

Data from Moneyfacts.co.uk shows that the number of seven-year fixed rate mortgage products rose by five month-on-month, increasing from 22 available on the 1 July to 27 on the 1 August. As well as this, during the same period there was an increase in 10-year and over fixed rate mortgage products, rising from 151 to 162.

Although the number of long term fixed rate mortgages remains lower than shorter fixed term products, the increase over the last month suggests that providers are becoming more willing to offer consumers the ability of locking their mortgage into an increasingly longer term.

The average five-year fixed rate mortgage has fallen from 2.84% to 2.79% in the past three weeks, research from Moneyfacts.co.uk reveals.

The research also found that the difference between the average two and five-year fixed mortgage rates has reduced by 0.03% to 0.32% over the same period. These rate drops seem to be lenders responding to a fall in SWAP rates and passing on the reduction to consumers.

Data published this week in the Moneyfacts UK Mortgage Trends Treasury Report found that competition within the tracker rate mortgage sector is falling, as there are now only 242 tracker rate mortgages available in the market, which is less than 5% of all residential mortgages. As well as this, the report also revealed that consumers are overwhelmingly choosing fixed rate mortgages, with nearly 92% of all new advances approved during the first three months of 2019 for this type of mortgage.

There are only 242 tracker rate mortgages available in the market, which accounts for less than 5% of residential mortgages overall, the latest Moneyfacts UK Mortgage Trends Treasury Report has found.

The report also found that not only are there few tracker mortgages available, but consumers are overwhelmingly choosing to opt for fixed rate mortgages instead, with nearly 92% of all new advances approved during the first three months of 2019 for fixed rate mortgages.

Tracker rate mortgages (residential only)

Number of products Average rate Products containing a collar Average rate (with collar) Average collar rate
242 2.18% 23 2.08% 2.00%

Source: Moneyfacts Treasury Reports

Darren Cook, finance expert at Moneyfacts, said: “It is unclear in which direction the next Bank of England base rate change will be going, but current futures markets indicate that it may be on the way down, so it is surprising that we see so few tracker rate mortgages currently available in the market. The tracker rate sector seems to be competing against near rock bottom rates on fixed mortgage deals, and a large majority of borrowers are taking advantage of these low rates.

“There are currently only 242 tracker rate mortgages available in the market, of which almost one in 10 (9.5%) have a collared rate, meaning that even if the Bank of England does decide to cut base rate – which this type of mortgage tracks – borrowers would not necessarily see a benefit.

“In fact, 20 of the 23 collared tracker rate mortgages currently available are collared at the initial rate of the tracker product, so borrowers will see no rate fall and no reduction in their monthly repayments if the base rate is reduced, but would see their monthly repayments increase if there is a base rate hike.

“The choice between opting for a tracker rate mortgage or a fixed rate mortgage is down to the risk appetite of the potential borrower, but with nearly 92% of advances currently being fixed, it seems that nearly all borrowers are choosing to be risk-averse during this period of economic uncertainty and favourable fixed rates.”  

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