Fixed mortgage average rates at a six-month low

Both the average two- and five-year fixed rates have fallen for the fourth consecutive month.

The average two- and five-year fixed rate mortgages are at a six month low, according to Moneyfacts data.

The average two year fixed deal now stands at 5.32%, which is 0.32 percentage points more than its five year fixed equivalent. The last time the average two-year fixed rate was this far above the five-year was February 2008.

Meanwhile, the average ‘revert to’ rate or Standard Variable Rate (SVR) continued to climb. At 7.12%, this rate has breached 7% for the first time since October 2008 and is now the highest rate since April 2008.

This means the margin between the average two-year fixed rate taken out two years ago and the average ‘revert to’ rate rose to 4.55% in March, the largest margin on Moneyfacts records.

The momentum in the residential mortgage market is positive, as fixed rates fell and product choice stabilised month-on-month.

Rate competition among lenders, meanwhile, has been more focused on longer-term fixed mortgages.

Prospective borrowers with a limited deposit or equity may be pleased to see fixed rates at higher loan-to-value deals are reducing. The average five-year fixed rate at 90% and 95% loan-to-value fell to 4.99% and 5.33% respectively month-on-month, which is 0.16 percentage points and 0.13 percentage points lower compared to the start of October 2022.

At the other end of the spectrum, in the 60% loan-to-value tier, the average five-year fixed rate has fallen by 0.18 percentage points from 4.94% to 4.76% over the same period. Product choice also grew notably overall in the 60% loan-to-value tier month-on-month, following a rise of 51 options to 657, now at its highest level on our records.

It is positive to see fixed rates falling, but at the same time, variable interest rates are rising significantly. Borrowers must therefore ensure they carefully consider the mortgage options available to them, particularly fixed rates, if they want peace of mind to secure their monthly repayments.