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Out of contract mortgage rates climb to 15-year high

Paloma Kubiak
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Paloma Kubiak

The average Standard Variable Rate (SVR) continues to climb and now stands at 7.3% in April, the highest rate since February 2008.

Back in February 2008, the rate was a slightly higher 7.31%, according to data comparison site Moneyfacts.

It noted that the average SVR has climbed from 4.41% in April 2021 (all LTVs) to 4.71% in April 2022. However, by October 2022, in the aftermath of the disastrous mini Budget, it had pushed upwards to 5.63% before rising to 7.12% in March 2023.

It also comes as the Bank of England base rate rose for the 11th consecutive time to 4.25% last month, resulting in variable interest rates also rising.

The average two-year tracker deal has breached 5% for the first time in over 14 years. It was last higher in December 2008 when the average stood at 5.41%.

This time last year it stood at 2.21% while in April 2021, the average came in at 2.27%.

Mortgage choice expands…but not for low deposit borrowers

The number of mortgage products available to homebuyers or remortgagors has risen to its highest point in over a year, with Moneyfacts registering 5,146 deals (all LTVs) in April, just below the pegged 5,356 in February last year.

Within loan to value (LTV) tiers, at 60% LTV, the product counts rose from 529 last year to 702 this year. Moneyfacts said this was the highest level on record.

The number of products at 85% LTV rose to 806 deals, also the highest level on Moneyfacts’ records.

At 90% LTV (so for those with a 10% deposit) the increase year-on-year was from 665 to 684, and at 95% LTV, product numbers actually fell from 367 in April last year to 204 now. However, products in this category have risen from the low 132 in October 2022, to 161 last month.

Meanwhile, the average two- and five-year fixed rates rose between the beginning of March and April to 5.35% and 5.05% respectively.

The margin between the average two-year fixed rate is 0.3% higher than the average five-year equivalent.

Product choice ‘positive across the market’

Rachel Springall, finance expert at Moneyfacts, said that the number of mortgage products had risen to its “highest point in over a year, boosting choice for consumers comparing deals and sets a positive movement across the market”.

She said: “The encouraging rise in products comes around six months on from the unprecedented uncertainty surrounding interest rates following the fiscal announcement.

“The month-on-month rise in products was a significant 774 options, and several LTV brackets experienced a rise, including deals at 95% LTV which has breached 200 deals for the first time since September 2022 at 274,” she added.

Springall added that interest rate competition among lenders was “mixed month-on-month”, but it is “widely expected” that fixed mortgage rates will fall over the next few months. This would be determined by “fluctuating swap rates and lenders’ business appetite”.

“Those borrowers with a large deposit or equity may be pleased to see the average rates at 60% LTV for a two-year or five-year fixed mortgage stand below 5%. However, those who are coming off a two-year fixed mortgage and wish to refinance on the same term at 60% LTV may wish to note the average rate on a two-year fixed mortgage in April 2021 was 1.63%, compared to 4.95% for April 2023,” she noted.