Mortgage rates fall to all-time low
The average two-year fixed rate and two-year variable rate have fallen to their lowest point since records began, according to Moneyfacts.
The financial information provider said this fall in mortgage rates defied economic indicators.
The average two-year fixed rate is now 2.26%, compared to 2.55% a year ago. Two-year trackers have also dropped, from 2.01% last July to 1.82% today.
Charlotte Nelson, finance expert at Moneyfacts, said: “While the average two-year fixed rate had stalled in recent months, it has fallen by 0.04% from June, so it appears that the trend of falling rates is now back on track.
“The fall in both the fixed and variable sector comes at an interesting time. Given mounting inflation and the Bank of England hinting at a Base Rate rise, falling rates are the last thing many would have expected.”
Looking to lock in
Moneyfacts suggested the fall in rates could be a result of intense competition among lenders trying to lock borrowers into a fix. This is because they know the many borrowers currently sitting on their SVR could move overnight if interest rates were hiked.
Nelson explained: “Though rates are still falling for now, borrowers will not necessarily need to see a Base Rate rise for rates to start to increase, as there will come a point where the only way to go from another record low is up. Borrowers sitting on their SVR or coming to the end of their deal may be wise to consider a low fixed rate now, before it’s too late.”