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Derin Clark

Derin Clark

Online Reporter
Published: 14/09/2020

Homeowners looking to lock into a fixed rate mortgage deal are being urged to act quickly as the rates on fixed deals have risen sharply in the last month.

In fact, during August the average two year fixed rate rose by 0.16%, from 2.08% on 1 August to 2.24% on 1 September, its largest increase since July 2009. Meanwhile, the average rate on five year fixed deals increased by 0.15%, from 2.34% on 1 August to 2.49% on 1 September – its biggest rise since March 2011. As the below chart shows, average fixed rates have been rising since July, when they reached historic lows of 1.99% on two year fixed deals and 2.25% on five year fixed deals.


Fixed mortgage rate analysis
  March 2020 April 2020 May 2020 June 2020 July 2020 August 2020 September 2020
Average two-year fixed rate (all products and LTVs) 2.43% 2.36% 2.09% 2.02% 1.99% 2.08% 2.24%
Average five-year fixed rate (all products and LTVs) 2.74% 2.66% 2.35% 2.26% 2.25% 2.34% 2.49%

Average rates shown are as at the first available day of the month, unless stated otherwise. Source: Moneyfacts Treasury Report


Commenting on the rate rises, Eleanor Williams, finance expert at, said: “While these rates are still some 0.19% and 0.25% lower than prior to lockdown, the level of increases seem to have gathered pace, doubling over the last two months. If these were to carry on their current trajectory, within the next couple of months, consumers could face average rates in excess of those available prior to the onset of the pandemic.”

Product numbers fall and fees rise

There was more bad news for those looking to lock into a new mortgage deal, as our research found that the number of product deals fell by 114 between August and September, falling from 2,526 available 1 August to 2,412 available on 1 September. In addition to this, the average fee on mortgage deals have continued to rise, increasing from £1,025 on 1 August to £1,032 on 1 September.

Fixed rate deals product analysis
  March 2020 April 2020 May 2020 June 2020 July 2020 August 2020 September 2020
Total product count (all LTVs, fixed and variable rate products) 5,222 3,192 2,566 2,810 2,728 2,526 2,412
Average fee (all products and LTVs, excluding no fees) £1,009 £986 £985 £992 £1,015 £1,025 £1,032

Average fees and product counts shown are as at the first available day of the month, unless stated otherwise. Source: Moneyfacts Treasury Report

Lowest fixed remortgage rates available today

This combination of rates and product fees rising, along with the fall in deals available, means that homeowners looking to remortgage should consider acting quickly to secure the best deals while they are still available.

The lowest rate in the two year fixed remortgage chart currently comes from Lloyds Bank, which is available at a 60% loan-to-value (LTV) and offers 1.17% (3.3% APRC) fixed until 30 November 2022 and then reverts to 3.59%.

Homeowners looking to lock into a five year fixed remortgage deal at a 60% LTV can get the lowest rates from Lloyds Bank, which offers 1.39% (2.8% APRC) fixed until 30 November 2025 and then reverts to 3.59%.

It is important to remember that when choosing a mortgage deal, borrowers should consider the entire deal, including product fees and incentives, and not just the rate. Those who are uncertain about which is the right deal for them should consider speaking to a mortgage broker. Williams added: “The combination of rising rates and fees, dwindling product choice and a race to take advantage of the stamp duty holiday, means that seeking independent, qualified advice at this crucial time would be wise to ensure that the best options for each individual’s circumstances can be pursued.”


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