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Average mortgage rates increase following Bank Rate rise
The majority of average mortgage rates have risen in the past month, although remain at long-term low levels
Since the increase in the Bank of England base rate from 0.10% to 0.25% last month, tracker mortgages have, unsurprisingly, risen in response.
But, according to analysis from Moneyfacts, so too have overall average fixed rates.
The financial information provider looked at the impact on mortgage rates following the 0.15 percentage point increase in the base rate last month.
The overall average rate for term tracker mortgage products rose in line with this uplift, going up by 0.15% to 3.53%, as expected. The overall average two-year tracker rate also rose, but by 0.17% to sit at 1.75%. Despite the rise, this is still 0.62 per centage points lower than the same rate a year ago.
But fixed rates rose too. For a third consecutive month the overall average two- and five-year fixed rates increased.
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%.
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%.
“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.”
