GARETH LOWMAN of SPF Private Clients shares his knowledge of the fixed-rate mortgage market.
Pricing on two-year, fixed-rate mortgages is at its highest level since 2016, according to data from Moneyfacts, as lenders raise rates ahead of an expected hike in Bank of England base rate. Swap rates, the rate lenders pay to borrow money from each other, have eased recently but the long-term trend is still upwards. Two-year money is up a third since Christmas and five-year Swaps have jumped by a quarter over the same timeframe.
While lenders have been prepared to absorb higher funding costs to an extent in order to be competitive and attract business, most of them have now re-priced. No lender wants to be left with the most competitive rate on the market, and be swamped with business, which would affect service levels.
However, there is no need for borrowers to panic, with a number of competitive five-year and two-year fixed rates still out there. Some borrowers are opting for longer term fixes given that the general trend of interest rates looks to be upwards. The number of borrowers remortgaging is high as people take advantage of low mortgage rates while they are still available.