The average two-year fixed mortgage rate now surpasses 4%, according to Moneyfacts. This comes just weeks after it noted that average five-year fixed rates passed the 4% threshold.

The rising rates follow the most recent Bank of England decision to increase its Base Rate by a further 0.50% to 1.75% on 4th August, said the price comparison site.

Moneyfacts found that since the start of this month, the overall average two-year fixed rate has already increased by 0.14% and has now reached 4.09%. It marks the first time this rate has breached 4% in over nine years.

Average five-year fixed rates have already gone up by 0.16% since the first of this month to 4.24%.

Shrinking premium

The differential between two- and five-year average rates has now shrunk to just 0.15%, meaning borrowers now pay a very small premium for longer-term payment security.

Eleanor Williams, finance expert at Moneyfacts.co.uk, added that consumers need to act quickly to bag a deal. She said: “The average shelf-life of a mortgage product had sunk to a record low of just 17 days at the start of this month. In the aftermath of another base rate increase since then, providers are continuing to react with further revision of their offerings. The level of choice has reduced, dropping by 269 products and leaving 4,138 on sale currently.

“For consumers hoping to mitigate some of the impact of the ongoing cost of living crisis with a new fixed deal, seeking advice may well be wise as this remains a very changeable landscape, and ensuring they select a product that suits their future plans and priorities is crucial.”