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Mortgage rates start to rise

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Borrowers have been warned that interest rates have already started to rise and to take advantage of the top deals in the market.

Research by Moneyfacts found that mortgage rates rose this month, the first increase in 13 months.

After a year of falling prices, borrowers are now being urged to take advantage of these low rates while they last.

The Bank of England base rate is expected to rise early in 2016 and many lenders appears to be preparing for further rate rises in the coming months.

It found the average two-year fix was now available at 2.72%, up from the 2.68% averaged in August. However, it is still lower than the 3.54% recorded a year ago.

For five-year deals the average rate also increased by 0.04% month-on-month, rising from 3.24% to 3.28%.

Some higher loan-to-valued deals were still seeing rates fall, although this was against the trend of the wider market.

Moneyfacts said: “Our figures show that the average two-year fixed mortgage rate rose by 0.04% this month, up from 2.68% in August to stand at 2.72% today, the first time an increase has been recorded since August last year. During that month the rate rose from 3.52% to 3.54%, where it remained in September 2014, before posting consecutive monthly falls until today.

“There are still slight variations when looking at different loan-to-values (LTVs), with rates at the lower end of the LTV scale posting larger increases, continuing the trend recorded last month.

“Meanwhile, those with small deposits could still reap the rewards of falling rates, with the average rate for a two-year 95% LTV mortgage falling by 0.06% to 3.35%. However, this was the only tier to see a reduction this month, so the general trend is clear.”

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