Fixed-rate mortgages still rising

The cost of fixed-rate mortgages continues to rise, even though swap rates have continued to fall during the past month, according to Moneyfacts.

The average two-year fixed-rate mortgage now (July 10) stands at 5.18%, which is just over a half percent higher than 4.67% at the beginning of June.

It means the margin between the average two-year fixed-rate mortgage and swap rates now exceeds a full 3% and stands at 3.15% today. This is after a period where we have witnessed two year swap rates fall from its latest peak of 2.51% on 11 June to only 2.04% on July 10.

Louis Kaszczak, head of Moneyfacts, said: “Fixed-rate mortgages are continuing to be in high demand as any future Bank Base Rate changes should only be an upward movement.

“The closer we get to a position where sentiment is stronger that the Bank Base Rate will be going up, the likelihood is that fixed rate deals will follow suit and become even more expensive.

“While the average rates are rising quickly, the good news is that there are still currently 42 two-year fixed-rate deals under 4%. But customers might need to act fast before these better deals get sold out.”