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Mortgage rates rise across the board but remain low annually

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Written by: Shekina Tuahene
10/01/2022
Average fixed and tracker mortgage rates have risen since the Bank of England increased the base rate but are still typically lower than they were last year, according to Moneyfacts.

Moneyfacts’ UK Mortgage Trends Treasury report showed that, as expected, tracker rates rose when the base rate was increased from its record low of 0.1% to 0.25%  last month.  

The average rate for a term tracker mortgage went up by 0.15% to 3.53% reflecting the change. 

Two-year tracker mortgage rates rose by 0.17% to 1.75%. However, this is 0.62% lower than it was the same time last year. 

As many lenders stated they will change their standard variable rates (SVR) in February, the average SVR remained flat on this time last year at 4.41%. 

Two and five-year fixed average rates increased in January, the third consecutive month of rises. This was likely down to lenders slowly increasing rates in preparation for a base rate change. 

The average rate for a two-year fixed rate mortgage across all loan to value (LTV) tiers now stands at 2.38%, a 0.04% increase month-on-month. Five-year fixed rates went up by 0.02% month-on-month to an average of 2.66%. 

Compared to last year, these were down from average rates of 2.52% for a two-year fixed rate and 2.71% for a five-year fixed rate mortgage. 

For 95% LTVs where rates are typically higher, average pricing for two and five-year fixed rates fell for the ninth consecutive month to 3.06% and 3.33% respectively. 

These are the lowest on record and down on the 4.44% and 3.62% respective average rates of last year. 

Eleanor Williams, spokesperson at Moneyfacts, said: “There may well be further increases to SVRs over the coming months, but the potential to save by switching from a variable revert rate to a fixed rate mortgage is clear, as the difference between the average two-year fixed rate and average SVR remains over 2%. 

“As total product choice continues to improve to levels not seen in 13 years, the overall average two- and five-year fixed mortgage rates have increased again this month, marking their third consecutive rise. 

“This echoes the trends recorded in previous months where the overall average rate rises can be attributed to increases across the rates offered at lower LTVs. Indeed, this month we recorded increases to all two-year fixed rates across the LTV brackets, with the exception of 95% and the niche 50% LTV sectors.” 

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