Lenders are still cutting interest rates on fixed mortgages despite the base rate continuing to rise. It means a significant gap has opened between the best fixes and standard variable deals.
- The average two and five year fixed rate mortgages are at a six month low, according to Moneyfacts data.
With rate competition among lenders being more focused on longer-term fixed mortgages there are some great deals out there.
Prospective borrowers with a limited deposit or equity may be pleased to see fixed rates at higher loan-to-value deals are reducing. The average five year fixed rate at 90% and 95% loan-to-value fell to 4.99% and 5.33% respectively month-on-month, which is 0.16 percentage points and 0.13 percentage points lower compared to the start of October 2022.
At the other end of the spectrum, in the 60% loan-to-value tier, the average five-year fixed rate has fallen by 0.18 percentage points from 4.94% to 4.76% over the same period. Product choice also grew notably overall in the 60% loan-to-value tier month-on-month, following a rise of 51 options to 657, now at its highest level on our records.
It is positive to see fixed rates falling, but at the same time, variable interest rates are rising significantly. Borrowers must therefore ensure they carefully consider the mortgage options available to them, particularly fixed rates, if they want peace of mind to secure their monthly repayments.
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