Record low rates are a thing of the past as fixed mortgage deals increase in cost over the year despite competition from lenders.
The latest UK Mortgage Trends Treasury Report from Moneyfacts shows fixed rate mortgage rates have increased since reaching a record low in October 2017 and a turning point in the market.
Homeowners from first time buyers, home movers, remortgage buyers and buy-to-let investors securing a mortgage deal can expect have higher repayments.
Over the last year there has been two base rate rises which has seen two-year fixed mortgage rates increase from 2.21% in October 2017 to 2.49% in October 2018.
Mortgage costs rise with base rates
Charlotte Nelson finance expert at Moneyfacts said, one month after the all time low mortgage rates were on the rise, as was the Bank of England base rate for the first time since July 2007.
The following table form Moneyfacts shows the change in mortgage rates for different fixed terms to October 2018:
| Mortgage type | Oct-16 | Oct-17 | Oct-18 |
|---|---|---|---|
| Two-year | 2.21% | 2.43% | 2.49% |
| Three-year | 2.49% | 2.61% | 2.72% |
| Five-year | 2.76% | 2.91% | 2.91% |
There have been two rises in base rates from the Bank of England one in November 2017 and one in August 2018.
The two-year fixed mortgage rates have increased by 0.28%, three-year fixed rates are higher by 0.23% and five-year fixed rates up only 0.15%.
Lenders have been forced to increase the cost of mortgage loans to homebuyers although they have remained competitive to have not raised cost as high as the 0.5% rise in bases rates.
Despite the rise here is higher activity from equity release buyers accessing wealth in their property using a lifetime mortgage to help to improve your quality of life or buy a more expensive home.
Competition keeps rates low
Since September 2018 the two-year mortgage fixed rates reduced by 0.04% from 2.53% for the first time in the last year.
According to Charlotte Nelson, the providers are reigniting competition in the market to attract remortgage buyers and retain their mortgage books.
The providers have let their standard variable rates (SVRs) go up reaching 4.89% in October and making it very attractive for homeowners and buy-to-let landlords to remortgage.
As a result the number of remortgage approvals were up by 9.2% year-on-year based on data from UK Finance helped also by the larger number of lower loan-to-value (LTV) deals, says Charlotte.
The cost of a two-year fixed rate mortgage to borrowers has increased by £335 per year compared to deals a year ago based on a £200,000 repayment mortgage over a 25-year term.
With the prospect of base rates rising it is unlikely that first time buyers, home movers, remortgage buyers and buy-to-let investors will benefit from record low mortgage deals in the near future.
What are your next steps?
Call our LCM mortgage brokers if you are a buy-to-let landlord with a property, remortgaging and want the best mortgage deal, buying your first home or you are planning to move home.
For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your home to spend on anything such as holidays of a lifetime or pay university fees for grandchildren.
Start with a free mortgage quote or call us and we can take your details.Learn more by using the mortgage cost calculators, property value tracker chart and equity release calculator.
