Two-year fixed mortgage rates surge to one-year high
The typical two-year fix-rate mortgage this week hit 2.4%, up from lows of 2.17% in September, data from Moneyfacts.co.uk showed.
Over the past month alone the average rate has lifted from 2.34% and is now at its highest level in a year. The Bank of England raised interest rates for the first time in a decade in November, taking the base rate to 0.5%. Monetary policymakers are expected to hike again in May, with more increases to possibly follow later in the year. As a result, swap rates – which banks use to price their fixed rate mortgages – have been rising and lenders have reacted with a spate of re-pricing action.
Borrowers looking to secure competitive remortgage deals have now been urged to act fast, as rates are expected to carry on creeping up in the coming weeks, Moneyfacts.co.uk warned.
Charlotte Nelson from Moneyfacts said: “Swap rates rising, is particularly significant, as this was an early sign of the base rate rise that occurred last November.
“Just like last time providers are again starting to factor swap rate rises into their pricing. This has caused the average two-year fixed rate to start creeping up, and this new trend is showing no signs of abating yet. With rates still low, it is difficult for providers to swallow the increased cost by any means other than increasing the rates on offer.”
“The only way from here appears to be up, so borrowers who are sitting on their Standard Variable Rate, or coming to the end of their deal, would be wise to look for a fixed rate. It is now important that they act fast to ensure they get the best possible.”