Derin Clark

Derin Clark

Online Reporter
Published: 23/09/2019

Mortgage borrowers are continuing to benefit from falling rates, with the latest Moneyfacts.co.uk research showing that the average two-year fixed mortgage rate has fallen from 2.464% to 2.440% in the last month, while the average five-year fixed mortgage rate has also fallen from 2.786% to 2.739% over the same period.

The largest rate reduction over this period was recorded in the five-year maximum 75% and 80% loan to value (LTV) tiers, which fell by 0.07% to 2.57% and 0.08% to 2.70% respectively. While mortgage borrowers needing a smaller loan and therefore looking to the lower tiers have been benefiting from a fall in rates, those with just a 5% deposit, however, have seen average two-year 95% LTV rate rise by 0.03% to 3.26% and its five-year counterpart increase by 0.01% to 3.64%.

Two year fixed average mortgage rates

Max LTV 60% 75% 80% 85% 90% 95% Overall average
23 Aug 19 1.85% 2.34% 2.44% 2.45% 2.64% 3.23% 2.464%
23 Sept 19 1.80% 2.31% 2.38% 2.44% 2.64% 3.26% 2.440%
Change -0.05% -0.03% -0.06% -0.01% 0.00% 0.03% -0.024%

Five year fixed average mortgage rates

Max LTV 60% 75% 80% 85% 90% 95% Overall average
23 Aug 19 2.18% 2.64% 2.78% 2.80% 2.96% 3.63% 2.786%
23 Sept 19 2.12% 2.57% 2.70% 2.76% 2.94% 3.64% 2.739%
Change -0.06% -0.07% -0.08% -0.04% -0.02% 0.01% -0.047%

Darren Cook, finance expert at Moneyfacts, said: “On 25 September 2017, the average two-year fixed rate reached its record low of 2.17%, which is 0.27% below the current average rate of 2.44%. This gives an indication that borrowers who may be arriving at the end of their current two-year deal will probably have a high motivation to remortgage.

“Not only is the jump from the average two-year fixed rate two years ago to the current average standard variable rate of 4.89% a significant increase of 2.72% – which would see interest payments more than double for those who remain on their current deal after the initial fixed rate period ends – but borrowers may need to look carefully to find a rate similar to the one they may have negotiated two years ago.

“However, it’s not just those coming to the end of a favourable fixed rate term that may have a high motivation to lock into a new deal, but those who are at the start of their journey. Borrowers looking to take their first step onto the property ladder may also feel a sense of urgency, with rates at the riskier LTV tiers of 90% and 95% LTV remaining static or increasing since the end of August.

“With the historic two-year fixes coming to an end this month, this may perhaps explain further why lenders are focussing on the lower-LTV tiers when competing on margins. Not only do mortgage providers need to compete for new business, but they also need to keep an eye on retaining their existing borrowers, keeping in touch with competitors’ mortgage rates to ensure that current customers consider their existing borrower products as their first option to remortgage.”

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.

Cookies

Moneyfacts.co.uk will, like most other websites, place cookies onto your device. This includes tracking cookies.

I accept. Read our Cookie Policy