Despite average rates falling between March and July, over the past month rates have started to rise, according to analysis by financial website Moneyfacts. For example, the average two-year fixed rate deal available to those looking to borrow up to 80% of the property value rose from 2.13% on 1st July to 2.22% on 1 August. Similarly, the average two-year fixed rate deal for those looking to borrow up to 70% of the property value increased from 2.12% to 2.20% during the same period.
Five-year fixed rates have also risenThe average five-year fixed rate for someone with a deposit of 20% has increased from 2.38% to 2.47% between July and August, whilst the average five year rate for someone with a 30% deposit has increased from 2.40% to 2.48%.
The average five-year fixed rate for those borrowing up to 60% of the property value has remained the same over the past month, at 1.98%. However, the average two-year fixed rate has risen slightly at 60% loan-to-value, from 1.69% to 1.71%.
Eleanor Williams, finance expert at Moneyfacts.co.uk said: “Although mortgage rates at lower loan to values have only started to rise, lenders are becoming more cautious during this period of economic uncertainty and, as a result, it could see rates rising further. Saying this, mortgage rates at lower loan to values are still competitively low.”
First-time buyers hit hardestTwo-year fixed rates for first-time buyers have risen sharply over the past months, with the average five-year fix for those with a 10% deposit having increased from 2.90% on 1st July to 3.07% on 1st August.
Mortgage options for those with smaller deposits have also reduced, with the number of deals available to those with a 10% deposit falling from 183 to 70 between 1 June and 1 July.
Focus on overall costAnyone looking for a mortgage, or to remortgage, must remember that although the headline rate is of course important, it’s essential to look at the overall cost of any deal including any arrangement fees, as well as any incentives such as cashback or free legal fees, before deciding which mortgage to choose.
If remortgaging, it’s worth checking with your existing lender to see what they can offer you, before shopping around with other lenders. Seek professional advice if you need any help deciding which deal is best for you based on your individual circumstances.