Published by Gbaf News
Posted on June 7, 2019
Latest analysis by Moneyfacts.co.uk shows that the difference between the average two-year and five-year fixed mortgage rate has narrowed by 0.06% from 0.42% to 0.36% since the beginning of the year, seeing it stand at the lowest difference recorded in seven years as a result. The average two-year fixed rate has fallen by 0.03% from 2.52% in January 2019 to 2.49% this month, while the average five-year fixed rate decreased by 0.09% from 2.94% to 2.85% over the same period.
Meanwhile, the gap between the average five-year fixed and the 10-year fixed mortgage rates has increased by 0.04%. This is despite the average 10-year fixed mortgage rate falling by 0.05% – from 3.05% in January 2019 to 3.00% in June – the lowest recorded average 10-year fixed rate since February 2018.
| Average two, five and 10-year fixed mortgage rate (Jan/Jun 2019) | |||||
| Two-year fixed average rate | Five-year fixed average rate | 10-year fixed average rate | Difference between two and five-year average rates | Difference between five and 10-year average rates | |
| Jan-19 | 2.52% | 2.94% | 3.05% | 0.42% | 0.11% |
| Jun-19 | 2.49% | 2.85% | 3.00% | 0.36% | 0.15% |
| Difference | -0.03% | -0.09% | -0.05% | -0.06% | 0.04% |
| Source: Moneyfacts.co.uk | |||||
Darren Cook, Finance Expert at Moneyfacts.co.uk, said:
“It seems that the intense competition within the two-year fixed rate sector is also appearing in the five-year fixed rate market, with the average five-year fixed rate falling by 0.06% more than its two-year counterpart since January this year. As a result, the difference between these two average rates now stands at 0.36%, the lowest since January 2012 when the gap stood at 0.35%.
“With the difference between the average two and five-year fixed rate at a seven-year low, the difference in the monthly repayment between these fixed terms will also be narrow. For example, on a repayment mortgage advance of £200,000 over a 25-year term at the average fixed rate for each respective term would see the average two-year repayment this month stand at £896.23, while the five-year average repayment amount would be £932.89, totalling a difference of £36.66 per month. Using the same mortgage criteria, the difference between the monthly repayments of the average five-year and 10-year mortgage rate (£948.42) this month is just £15.53.
“Currently, mortgage rates appear to be competitive across the board, allowing borrowers the flexibility to choose whether to fix repayments for either the short, medium or longer-term initial rate periods. However, borrowers must also remember to consider other factors, such as potentially greater fee expenses if they opt for a shorter initial fixed payment term and have to switch deals more frequently or the possible implication of mortgage tie-in costs if they wish to shop elsewhere during a longer initial rate period.”
