Five-year mortgage rate at two-year high |
MONEYFACTS ARCHIVE. This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.


Lieke Braadbaart

Online Writer
Published: 12/11/2018

The upcoming Moneyfacts UK Mortgage Trends Treasury Report can reveal that the average five-year fixed mortgage rate has risen for the first time in four months, which may alarm homeowners still waiting for their current deal to run out before they can remortgage. As it now stands at the highest level since December 2016 after a 0.04% month-on-month increase, this may well be the start of an upward trend.

"Since the base rate rise in August, providers have tried to keep their five-year fixed rates as competitive as possible to attract those looking to remortgage," explained Darren Cook, finance expert at Moneyfacts, with these providers spurred on by the "many borrowers looking to come off their standard variable rate (SVR) or lock in for a longer term to mitigate any potential further rises. This saw the average five-year fixed rate fall by 0.02% last month."

Dec-16 Nov-17 Oct-18 Nov-18
Average five-year fixed mortgage rate 2.96% 2.88% 2.91% 2.95%
Source: Moneyfacts Treasury Reports

Given this year's base rate increase and other economic factors, however, it was only a matter of time before providers started to increase their mortgage rates, with the low deals largely untenable over the long run. It seems that lenders have chosen this month to reassess their options.

And yet, demand is still driving rates down, which is likely why the long-term average has only increased by 0.08% since the start of the year, rising from 2.87% in January to 2.95% at the start of this month. "Demand for five-year fixed mortgages has grown, with LMS figures showing that these deals account for 47% of the total remortgage market," Darren reported. "This is unsurprising, as many borrowers look for some certainty in a very uncertain economy."

Due to the competition in the market, there has been little difference between the two-year and the five-year rates. Indeed, according to Darren, "the report shows the average two-year fixed rate currently stands at 2.53%, just 0.42% lower than the average five-year rate, which is significantly lower than the difference recorded two years ago, when it stood at 0.64%."

As a result of all this, Darren concluded that "borrowers coming to the end of their deal or sitting on an SVR who are considering a five-year fixed rate mortgage should look to remortgage as soon as possible, as with rates rising, it may be a case of now or never to secure a good deal."


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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