Mortgage rates expected to stay down as two-year fixes hit 12-month low
The data showed that the average two-year fixed rate reached 2.31% today, compared with 2.59% recorded the same day a year earlier.
Equally, five-year fixes are also lower than this day in 2016, falling from 3.27% to 2.92%.
Rachel Springall, finance expert at Moneyfacts, said there was still a keen drive to lend to consumers but there were events on the horizon such as a potential Bank Base Rate rise that could impact this.
“In terms of the first quarter of this year we’re likely to see prices stay quite low and even historically low. There might be a couple of the lowest of the low rates that disappear as lenders revisit their pricing but otherwise we’re still going to see these rates around,” she added.
John Charcol’s product technical manager Simon Collins said that many consumers were likely to opt for longer-term fixes due to uncertainty about the future of the UK’s economy.
“The popularity of two-year fixes is starting to shift as we’re not expecting house prices to grow as much as they have done in recent years and the number of housing transactions is probably going to go down. We might see more people enquiring about two-year deals but ending up taking a longer-term product as a result. Two years is a very short time in the mortgage market and the economy right now,” Collins explained.
“These deals might regain some of their popularity and become more viable when we know what Brexit’s going to look like. If you take a two-year deal now you’re going to come out slap bang in the middle of all the negotiations so hence more people turning to five and seven-year fixes.”