Mortgage Rates

Mortgage rates of interest inch upwards this 12 months – however it might nonetheless be price taking a five-year repair


Average mortgage rates have risen slightly in the past few months despite increasing competition among lenders – but experts say it might still be worth pursuing a long-term fix.

Since the beginning of this year, the interest rate on the typical two-, five-, and ten-year fixed-rate mortgage has risen, according to financial experts at Moneyfacts.

It did so despite the fact that some major lenders launched headline-grabbing deals at rock bottom.

The Nationwide Building Society today launched a two-year fixed contract with 0.99 percent interest for rescheduling borrowers with a 40 percent deposit or equity, while TSB has been offering a similar product since May.

Slowly rising: Mortgage rates rose between January and June 2020, according to Moneyfacts, but could fall if more competition comes into the market

The strongest rate hike was seen in ten-year fixings, up from 2.85 percent in January to 2.98 percent today, despite being a relatively niche product.

Meanwhile, the five-year lock-up rate has increased from 2.71 percent in January to 2.81 percent today, and the two-year lock rate has increased from 2.52 percent in January to 2.58 percent today.

The typical standard variable interest rate – a lender default rate to which borrowers drop at the end of their fixed mortgage term – remained unchanged at 4.41 percent.

In general, mortgage rates are the same or lower today than they were five years ago, reflecting a long-term downward trend.

The recent surge was partly caused by lenders becoming cautious in the early days of the first national coronavirus lockdown, pulling mortgage deals off the market and raising some interest rates.

However, borrowers could soon start cutting rates. Moneyfacts said “signs of competition are emerging” as the number of mortgages in the market increased.

In addition to announcing 0.99 percent mortgages, Nationwide also cut rates on some of its other products by as much as 0.20 percentage points.

Other lenders, including HSBC, recently lowered their interest margins as well.

Borrowers may therefore be tempted to sign a two-year fixed contract and hope that interest rates will go down and stay low.

However, Moneyfacts also said that rescheduling to a longer-term fixed contract of five or ten years might still be worthwhile as it would give borrowers security in a volatile economic climate.

Mortgage rates have risen this year, although more deals are coming on the market

Mortgage rates have risen this year, although more deals are coming on the market

Rachel Springall, Financial Specialist at, said: “The motivation to move from a standard adjustable rate mortgage to a fixed rate mortgage may be obvious, but what has become more apparent over the past few months is the reassurance in setting it up.” can offer longer.

‘Despite an increase in the average two-, five-, and ten-year fixed-rate mortgage rates over the past few months, it’s still worth considering getting a new fixed-rate loan.

“Interest rate volatility is a response to the pandemic as the mortgage market contracted as lenders focused on their existing customers rather than new business.

Borrowers must weigh the five-year fixation amid short-term rate hikes against the possibility of a bigger jump if they reschedule after two years

Borrowers must weigh the five-year fixation amid short-term rate hikes against the possibility of a bigger jump if they reschedule after two years

‘However, the situation seems to be turning for the better in the past few weeks as both price competition and product volume are returning.’

Springall added that borrowers could save an average of £ 10,000 in five years by switching from an SVR to a five-year fixed rate deal.

A homeowner with an outstanding mortgage balance of £ 200,000 over 25 years would save the £ 10,000 moving from the typical SVR of 4.41 percent to the average 5 year fixed rate of 2.81 percent.

But not everyone will be able to switch.

“The ability to move business depends on a person’s circumstances, such as whether they have been on leave or have little disposable income to pay the associated fees,” said Springall.

She also warned buyers not to be drawn to a low interest rate and ignore the other costs involved.

“The best deal also depends on the overall package. While there are some two-year fixed-rate mortgages as low as 0.99 percent, they may not be the most attractive in terms of actual cost, and borrowers should.” Beware of headline-grabbing prices, ”she said.

You can compare rates and fees using This is Money’s mortgage calculator.

Another trend in the mortgage market in recent weeks has been the reintroduction of mortgages to those with only 5 percent deposit.

Since these usually charge higher interest rates, the change could have contributed to the increase in the average interest rate.

Best mortgages

Some of the links in this article may be affiliate links. If you click on it, we may receive a small commission. This helps us fund This Is Money and use it for free. We do not write articles to promote products. We do not allow commercial relationships to compromise our editorial independence.