Editor's Pick

Average two-year fixed rate mortgage tops 6%

Christina Hoghton
Written By:
Christina Hoghton

Rates are still rising and there could be more pain to come for borrowers

The average rate for a two-year fixed mortgage is now 6.01%, said Moneyfacts, the highest it’s been since December last year.

The independent financial information provider said the current increase comes as a number of lenders made changes to their fixed rate ranges over recent weeks. They did that because of the likelihood of future hikes to the Bank of England base rate.

Why are rates rising?

Rates started rising again after April’s inflation figures, published by the Office for National Statistics (ONS), were worse than expected, said Moneyfacts. As a result, there’s a possibility that the Bank of England’s Monetary Policy Committee (MPC) could vote for further increases to the base rate in an attempt to tackle the increasing cost of living.

The MPC will meet to vote on interest rates on Thursday.

On the day before April’s inflation statistics were announced, the average two-year fixed rate stood at 5.33%. With the average two-year deal now reaching 6.01%, according to Moneyfactscompare.co.uk calculations, this translates roughly to an increase of £81 per month for the initial term, on a typical 25-year £200,000 mortgage.

The average five-year fixed rate is also on the rise but, at 5.67%, is unusually cheaper than the average two-year deal.