Mortgage rates have been on a wild ride over the last six months, leaving those looking to buy a home or remortgage in a state of uncertainty.
Despite the Bank of England keeping its base rate steady, the cost of mortgages has fluctuated significantly. This means that the interest you pay for your mortgage can change even if the official borrowing rate stays the same.
What’s happening to mortgage rates?
Let’s break down the numbers:
- Two-year fixed rate mortgages: The average rate for these deals fell slightly from 6.04% in December 2023 to 5.93% now. However, it’s worth noting that this rate is actually higher than it was just last month (5.91%).
- Five-year fixed rate mortgages: Similar to the two-year fix, the average rate here has dropped from 5.65% in December to 5.50% today. Again, this rate has actually crept up from 5.48% since last month.
- Ten-year fixed rate mortgages: If you’re looking for a longer-term fix, the average rate has actually risen, from 5.96% in December to 6.03% now.
Why are rates so jumpy?
One reason for these fluctuations is the volatile “swap rate” market. Think of swap rates as the rates banks charge each other for money – these rates directly impact the interest rates they offer to you and me.
What does this mean for you?
- Remortgaging?: If you’re coming to the end of a fixed-rate deal, brace yourself. With average rates creeping up, you might find yourself paying more each month. It’s crucial to shop around for the best deal and consider whether a fixed or variable rate is right for you.
- First-time buyer?: Getting on the property ladder is already tough, and these fluctuating rates don’t help. The good news is that even though rates have risen, they’re still lower than the average standard variable rate (SVR) of 8.18%.
Expert advice
Rachel Springall, a finance expert at Moneyfactscompare.co.uk, urges both new buyers and those remortgaging to seek advice from an independent financial advisor. With rates so unpredictable, getting expert help is essential to find the best deal for your circumstances.