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Majority of average mortgage rates rise

Image of a Moneyfacts Mortgage Treasury Report Image of a Moneyfacts Mortgage Treasury Report Image of a Moneyfacts Mortgage Treasury Report
Eleanor Williams, Press Officer
Eleanor Williams, Press Officer / Finance Expert T: 01603 476205 E: Email Eleanor
10/01/2022

Majority of average mortgage rates rise

Majority of average mortgage rates rise

The latest Moneyfacts UK Mortgage Trends Treasury Report data illustrates that while mortgage availability has continued to improve, following the increase in the Bank of England base rate from a historic low of 0.10% to 0.25% last month, as may have been expected average tracker rates have risen, but so too have overall average fixed rates.

 

The latest Moneyfacts UK Mortgage Trends Treasury Report data illustrates that while mortgage availability has continued to improve, following the increase in the Bank of England base rate from a historic low of 0.10% to 0.25% last month, as may have been expected average tracker rates have risen, but so too have overall average fixed rates.

 

  • After a 0.15% increase in the base rate last month, Moneyfacts latest data shows that the overall average rate for term tracker mortgage products rose in line with this uplift, going up by 0.15% to 3.53%. The overall average two-year tracker rate also rose, but by 0.17% to sit at 1.75%, which - despite this month’s increase - is 0.62% lower than the same rate was a year ago.
  • For a third consecutive month the overall average two- and five-year fixed rates have risen. At 2.38% the average two-year fixed has seen a 0.04% month-on-month rise, while the five-year equivalent went up 0.02% to 2.66%. This was again fuelled by increases across most loan-to-value (LTV) tiers.
  • Average two- and five-year fixed rates at 95% LTV bucked the trend and fell for the ninth consecutive month. At 3.06% and 3.33% respectively, these averages supersede the record lows of last month and are the lowest on record.
  • After a 0.15% increase in the base rate last month, Moneyfacts latest data shows that the overall average rate for term tracker mortgage products rose in line with this uplift, going up by 0.15% to 3.53%. The overall average two-year tracker rate also rose, but by 0.17% to sit at 1.75%, which - despite this month’s increase - is 0.62% lower than the same rate was a year ago.
  • For a third consecutive month the overall average two- and five-year fixed rates have risen. At 2.38% the average two-year fixed has seen a 0.04% month-on-month rise, while the five-year equivalent went up 0.02% to 2.66%. This was again fuelled by increases across most loan-to-value (LTV) tiers.
  • Average two- and five-year fixed rates at 95% LTV bucked the trend and fell for the ninth consecutive month. At 3.06% and 3.33% respectively, these averages supersede the record lows of last month and are the lowest on record.

Mortgage market analysis

 

Jan-17

Jan-20

Jan-21

Dec-21

Jan-22

Fixed and variable rate products

Total product count - all LTVs

4,096

4,969

2,893

5,315

5,394

All LTVs

Average two-year fixed rate

2.31%

2.44%

2.52%

2.34%

2.38%

Average five-year fixed rate

2.92%

2.74%

2.71%

2.64%

2.66%

Average two-year tracker rate

1.98%

2.00%

2.37%

1.58%

1.75%

Average term tracker rate

2.65%

3.72%

2.75%

3.38%

3.53%

Standard Variable Rate (SVR)

4.56%

4.90%

4.41%

4.40%

4.41%

95% LTV

Average two-year fixed rate

3.89%

3.25%

4.44%

3.09%

3.06%

Average five-year fixed rate

4.37%

3.56%

3.62%

3.39%

3.33%

Data shown is as at the first available day of the month, unless stated otherwise. Source: Moneyfacts Treasury Reports

Mortgage market analysis

 

Jan-17

Jan-20

Jan-21

Dec-21

Jan-22

Fixed and variable rate products

Total product count - all LTVs

4,096

4,969

2,893

5,315

5,394

All LTVs

Average two-year fixed rate

2.31%

2.44%

2.52%

2.34%

2.38%

Average five-year fixed rate

2.92%

2.74%

2.71%

2.64%

2.66%

Average two-year tracker rate

1.98%

2.00%

2.37%

1.58%

1.75%

Average term tracker rate

2.65%

3.72%

2.75%

3.38%

3.53%

Standard Variable Rate (SVR)

4.56%

4.90%

4.41%

4.40%

4.41%

95% LTV

Average two-year fixed rate

3.89%

3.25%

4.44%

3.09%

3.06%

Average five-year fixed rate

4.37%

3.56%

3.62%

3.39%

3.33%

Data shown is as at the first available day of the month, unless stated otherwise. Source: Moneyfacts Treasury Reports

Eleanor Williams, Finance Expert at Moneyfacts, said:

“The impact of the Bank of England base rate rise in December 2021 can start to be seen in the rate increases which have been passed on to term and two-year tracker average rates, which went up by 0.15% and 0.17% respectively month-on-month. However, the average standard variable rate (SVR) has so far seen a small 0.01% rise from 4.40% to 4.41% month-on-month. 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. The two-year average fixed rate is currently 2.38% and the five-year equivalent sits at 2.66%, having seen slight rises of 0.04% and 0.02%. 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.

“Borrowers with a 5% deposit or equity may be very pleased to note that following drops of 0.03% and 0.06% to 3.06% and 3.33% respectively, the average two- and five-year fixed rates have fallen even further to reach another record low this month. In fact, the average two-year rate at 95% LTV is currently 1.38% less than the 4.44% that borrowers searching for an equivalent deal this time last year would have faced. Supporting recent analysis from Yorkshire Building Society, which noted that the number of first-time buyers had reached a 20-year high, our data illustrates that there are 339 more products on offer at 95% LTV than were available in January 2021. Following the end of the Stamp Duty holiday, it may be that this is a sector in which lenders are keen to continue competing for business, supported by the mortgage guarantee scheme which is set to run until the end of this year, and regardless of changes to base rate.

“With the potential for the Bank of England to apply further increases to the base rate in the coming months, there is no guarantee that the cost of borrowing on mortgages will not continue to rise overall. As the threat of rising inflation and potential for the cost of living to continue to rise and squeeze household budgets even more, there may be borrowers prompted to act sooner than perhaps they might have planned to in considering securing a new mortgage deal.”

Eleanor Williams, Finance Expert at Moneyfacts, said:

“The impact of the Bank of England base rate rise in December 2021 can start to be seen in the rate increases which have been passed on to term and two-year tracker average rates, which went up by 0.15% and 0.17% respectively month-on-month. However, the average standard variable rate (SVR) has so far seen a small 0.01% rise from 4.40% to 4.41% month-on-month. 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. The two-year average fixed rate is currently 2.38% and the five-year equivalent sits at 2.66%, having seen slight rises of 0.04% and 0.02%. 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.

“Borrowers with a 5% deposit or equity may be very pleased to note that following drops of 0.03% and 0.06% to 3.06% and 3.33% respectively, the average two- and five-year fixed rates have fallen even further to reach another record low this month. In fact, the average two-year rate at 95% LTV is currently 1.38% less than the 4.44% that borrowers searching for an equivalent deal this time last year would have faced. Supporting recent analysis from Yorkshire Building Society, which noted that the number of first-time buyers had reached a 20-year high, our data illustrates that there are 339 more products on offer at 95% LTV than were available in January 2021. Following the end of the Stamp Duty holiday, it may be that this is a sector in which lenders are keen to continue competing for business, supported by the mortgage guarantee scheme which is set to run until the end of this year, and regardless of changes to base rate.

“With the potential for the Bank of England to apply further increases to the base rate in the coming months, there is no guarantee that the cost of borrowing on mortgages will not continue to rise overall. As the threat of rising inflation and potential for the cost of living to continue to rise and squeeze household budgets even more, there may be borrowers prompted to act sooner than perhaps they might have planned to in considering securing a new mortgage deal.”

Notes to editors

Pioneering financial comparison technology for over 30 years.

Moneyfacts Group plc is the UK’s leading provider of retail financial product data. Used by virtually every bank and building society in the UK, and supplied to the Bank of England, Financial Conduct Authority, Financial Ombudsman Service, HM Treasury, Prudential Regulatory Authority and UK Finance.

Our expert research team monitors the thousands of mortgages, savings, credit card, personal loan, business banking, life, pension and investment products in the UK.

Moneyfacts is the UK's leading independent provider of finance product data. For over 30 years Moneyfacts' information has been a key driver behind personal finance product decisions.

For more information about us please see our key facts.

Broadcast

Our broadcast suite enables our finance experts to appear in-vision for television, and we regularly comment live on national and regional radio.

To arrange an interview for radio or television, please contact our press department. We have an in-house broadcast room with ISDN (01603 230551) and Skype (Moneyfacts).

 

Notes to editors

Pioneering financial comparison technology for over 30 years.

Moneyfacts Group plc is the UK’s leading provider of retail financial product data. Used by virtually every bank and building society in the UK, and supplied to the Bank of England, Financial Conduct Authority, Financial Ombudsman Service, HM Treasury, Prudential Regulatory Authority and UK Finance.

Our expert research team monitors the thousands of mortgages, savings, credit card, personal loan, business banking, life, pension and investment products in the UK.

Moneyfacts is the UK's leading independent provider of finance product data. For over 30 years Moneyfacts' information has been a key driver behind personal finance product decisions.

For more information about us please see our key facts.

Broadcast

Our broadcast suite enables our finance experts to appear in-vision for television, and we regularly comment live on national and regional radio.

To arrange an interview for radio or television, please contact our press department. We have an in-house broadcast room with ISDN (01603 230551) and Skype (Moneyfacts).

 

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Rachel Springall Press Officer / Finance Expert
Eleanor Williams Press Officer / Finance Expert