Biggest drop to two-year fixed mortgage rates since 2022 according to Moneyfacts

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The latest Moneyfacts UK Mortgage Trends Treasury Report shows the average two-year fixed mortgage rate significantly fell month-on-month by 0.37%, its biggest monthly fall since December 2022.

Average mortgage rates on two- and five-year fixes improved for a sixth consecutive month, meaning the average two- and five-year fixed rates fell between the start of January and the start of February to 5.56% and 5.18%, respectively.

The average two-year fixed rate stands 0.38% higher than the average five-year equivalent. The average two-year tracker variable mortgage remained at 6.15%.

The overall number of mortgages 

Mortgage product choice overall fell month-on-month, for the first time since July 2023, to 5,787 rate options. 

The average shelf-life of a mortgage product rose to 28 days, the highest figure since February 2023 (28 days). The average ‘revert to’ rate or Standard Variable Rate fell slightly by 0.01%, to 8.17%.

Mixed mortgage rate news 

Mortgage lenders have changed their rates again this week. Nationwide Building Society increased selected good news by up to 0.25%, while Santander lowered some new customer fixes by up to 0.16%. These changes apply from today (13th February).  

Rachel Springall, Finance Expert at Moneyfacts, said: "Those borrowers who have waited patiently in recent months to re-finance, or indeed are preparing for when their mortgage deal expires, would be wise to review rates, as lenders are closely monitoring the volatile swap rate market, which tends to influence fixed-rate pricing."

Fewer sub-4% mortgage rates available  

Fewer banks and building societies are offering sub-4% five-year fixes as the cost of funding mortgages has increased in recent weeks. 

The most competitively priced two-year fixes start from 4.20%, while Santander, NatWest and HSBC still offer sub-4% five-year fixes for borrowers with larger deposits. 

The cost of funding mortgages fluctuates, and as a result, the number of sub-4% fixes has reduced. They may come back again, but this may take some time, even if the Bank of England base rate reduces.

 Source: Moneyfacts 12 February 2024

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The information contained within was correct at the time of publication but is subject to change.

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