Fixed-rate mortgage deals and some variable deals are on the increase as they track the Bank of England base rate, according to an analysis. The Bank of England base rate increased 0.15 percentage points in December 2021, taking it to 0.25 per cent.
According to the financial information website Moneyfacts, the overall average rate for term tracker mortgages has increased in line with the increase in the base rate, from 3.38 per cent in December 2021 to 3.53 per cent in January.
Moneyfacts said that this is the third month in a row where the average two and five-year fixed mortgage rates on the market have increased, with the average two-year deal increasing from 2.34 per cent last month to 2.38 per cent in January 2022.
The average five-year fixed rate increased from 2.64 per cent in December 2021 to 2.66 per cent in January 2022.
The rate increases are being fuelled by mortgages at most deposit sizes, but there is good news for first-time buyers with smaller deposits.
Two and five-year fixed-rate mortgages for borrowers with five per cent deposits have eschewed the trend, and have fallen again, for the ninth month in a row, with rates currently at 3.06 and 3.33 per cent respectively, the lowest on record, according to Moneyfacts.
Eleanor Williams, a finance expert at Moneyfacts, cautioned that with there being a potential for the Bank of England to apply further base rate increases over the coming months, there is no guarantee that the cost of borrowing on mortgages will not continue to increase overall.
“As the threat of rising inflation and potential for the cost of living to continue to rise and squeeze household budgets, even more, there may be borrowers prompted to act sooner than perhaps they might have planned to in considering securing a new mortgage deal,” she said.
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