Fixed Mortgage Rates Drop for Sixth Consecutive Month: Will They Continue?

  • The average two-year fixed interest rate fell by 0.37 percentage points in January to 5.56%.
  • This was the biggest monthly decline since December 2022, according to Moneyfacts
  • But some lenders are now raising interest rates again, so what should borrowers do?

Average fixed mortgage rates fell for the sixth straight month in January, according to the latest figures from financial researchers at Moneyfacts.

The overall average two-year fixed rate fell by 0.37 percentage points from 5.93 percent to 5.56 percent during the month.

Meanwhile, the average five-year mortgage rate fell from 5.55 percent to 5.18 percent.

This represents the largest monthly decline since December 2022.

Mortgage lenders have been cutting interest rates since August when the average two-year fixed rate reached a peak of 6.85 percent and the average five-year fixed rate reached 6.37 percent.

Mortgage lenders have been cutting interest rates since August when the average two-year fixed rate reached a peak of 6.85 percent and the average five-year fixed rate reached 6.37 percent.

Mortgage lenders have been cutting interest rates since August when the average two-year fixed rate reached a peak of 6.85 percent and the average five-year fixed rate reached 6.37 percent.

This means the average borrower on a £200,000 two-year fix-up mortgage with a 25-year repayment term can expect to pay £1,234 a month now compared to £1,394 a month in August.

At the beginning of this year, a mortgage price war broke out, with more than 50 mortgage lenders cutting interest rates on residential properties, some more than once.

However, the cuts have largely stopped over the past two weeks Some lenders are now increasing interest rates.

The average two-year fixed rate rose from 5.56 percent to 5.59 percent, and the average five-year fixed rate rose from 5.18 percent to 5.23 percent.

From tomorrow, Nationwide Building Society said it will increase some of its fixed and tracker rates by up to 0.25 per cent.

But borrowers who secure the cheapest deals can still get an interest rate of just under 4 percent when locked in for five years, or just above 4 percent when locked in for two years.

The cheapest five-year fixed rate available to someone buying or remortgaging with at least a 40 per cent deposit or an equity stake in their home is currently 3.93 per cent, with a fee of £999.

Anyone buying with a 40 per cent deposit can fit in for two years at interest as low as 4.2 per cent, again with a fee of £999.

Advice to anyone approaching remortgaging is to act now rather than wait and hope interest rates fall.

Market expectations of interest rates are reflected in swap rates. Mortgage lenders price fixed interest rates according to Sonia swap rates in particular.

Today, five-year swaps are currently at 3.88 percent, and two-year swaps are at 4.41 percent.

Both are up compared to the beginning of the year when five-year swaps were 3.4 percent and two-year swaps were 4.04 percent.

Rachel Springall, financial expert at Moneyfacts, said: “Those borrowers who have waited patiently in recent months to refinance, or are in fact preparing for the expiry of their mortgage deal, would be wise to review interest rates, as lenders closely monitor volatile conditions.” Swap rate market, which tends to influence fixed interest rates.

“There have been high expectations for fixed interest rates to fall further, and whether now is the right time to refinance will depend on the individual’s circumstances.”

“Lenders are constantly reviewing their ranges, and interest rates are likely to fluctuate in the coming weeks due to noise surrounding future interest rate expectations.”

(Tags for translation) Daily Mail

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