The price of the average fixed-rate mortgages have increased for the first time since June but still remain much lower than the same time last year.

Fierce competition from lenders has caused rates on two and five-year fixed rate deals to fall consecutively over the past four months. It has meant many borrowers who have taken out mortgages during this time have been benefiting from record low prices on their repayments.

However, it would appear the tide may be turning as new data released today by Moneyfacts.co.uk revealed prices over the last month had climbed up a by 0.04% on both two-year and five-year fixes to reach 2.29% and 2.59% respectively across all types of mortgages.

Borrowers with bigger deposits or equity were worst hit by the price hikes. For those people taking out mortgages for loans for 75% of the property’s value – those with 25% deposits or more – rates have increased the most.

Borrowers taking out 65% loans will have seen rates go up by 0.39% and 0.38%, to 2.50% and 2.70% respectively on two-year and five-year fixed rates.

The good news is prices are still low compared to November 2020 and product choice has exceeded 5,000 for the first time since March 2020 (5,222).

Moneyfacts said the most notable increase in choice was for borrowers with smaller deposits of 5% or 10%, where the number of options rose by 57 and 23 products respectively.

Eleanor Williams, finance expert at Moneyfacts, said: “The start of November marks a reverse in the average rate cut trend; while still lower than their year-on-year equivalents, the overall average two- and five-year fixed rates have increased for the first time since June, with both rates rising by 0.04%.”

Unsettled market

The data comes as experts forecast a Bank of England base rate rise is due and also after predictions emerged mortgage rates could start rising in the New Year and climb by as much as 13% in 2023.

Eleanor added: “As the market remains unsettled, borrowers may consider this an opportune time to explore securing a new deal, as there is no guarantee that rates will not continue to increase in the months to come. Seeking out independent financial advice to assess the changing market is vital to ensure the best possible deal can be secured considering the rate, associated fees and incentives.”

 

Article sourced from What Mortgage on 8^th November 2021. Original full article can be viewed by clicking link below

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