By: Sarah Williams

The average interest rate for both two and five-year fixed mortgages has dropped to below 6% for the first time in two months. Moneyfacts have reported the typical two-year fixed deal now has an average rate of 5.99% and is likely to fall further. The five-year fixed rate is now at 5.78%. Following the mini-budget, the average mortgage rate peaked at 6.65%.

Over the next few weeks, it is likely rates will fall further as mortgage lenders try to make their products more appealing as we come to the end of 2022.

Fixed rate mortgages have a set interest rate during the term of the deal. Most deals are two or five years; however, some longer deals are offered. After the deal term ends, the initial rate lapses and is replaced by a variable interest rate, with the rate determined by the lender. Variable or tracker mortgages can change every month, usually in line with the Bank of England’s base rate.

For first time buyers and those looking to remortgage, fixed rate deals are far higher than they have been in previous years. Over the past year, the Bank of England have progressively increased the base rate to fight inflation. Fixed rate deals have increased in line with the base rate.  However, following the uncertainty of the market following the mini budget, the fixed rate deals shot up to 6.65%.

For those taking out a new deal, it is very likely they will pay a higher interest rate than previously. The average interest rate on a 2-year fixed deal was 2.34% in December 2021, prior to the many increases of base rate by the Bank of England.

Now interest rates are starting to fall again. It is important borrowers seek independent mortgage advice to properly consider the deals available and the best plan of action for their circumstances.
 

Get in touch with blossomfield now and one of our advisors can guide you.