Fixed mortgage rates creep higher in April

Despite a slight rise in average fixed mortgage rates, there’s still some reason for optimism.

Between the start of March and the start of April, average rates on two- and five-year fixed mortgages saw a marginal increase, according to data from the Moneyfacts UK Mortgage Trends Treasury Report.

The average two-year fixed rate rose from 5.76% to 5.80% while the average five-year rate rose from 5.34% to 5.39%.

However, this rise in rates was more modest than the increase recorded in the previous month.

“It is worth noting that both the average two- and five-year fixed rates are lower than they were back at the start of 2024,” Rachel Springall, Finance Expert at Moneyfacts, pointed out.

“Borrowers will find rates are significantly lower compared to six months ago, when the average two- and five-year fixed rates were 0.67% and 0.58% higher respectively,” she continued.

Signs of stability

Encouragingly for those planning to take out a mortgage in the near future, the number of products available increased to 6,307 at the start of April, its highest level since February 2008.

This is over 1,000 more than last April when there were just 5,146 products on offer.

And, in a positive sign for first-time buyers, the number of mortgage products with a higher loan-to-value also saw a month-on-month increase.

There were 335 deals with a 95% LTV available at the start of this month, up from 318 in March, while the number of deals with a 90% LTV rose from 761 to 774.

The availability of products at 90% LTV is now at its highest level since March 2020, while the availability at 95% LTV is at its highest level in almost two years.

This combined total of 1,109 deals for borrowers with a small deposit or limited equity in their property is considerably higher than the 888 deals that were available to this group one year ago.

As well as a wider selection of mortgage products to choose from, deals also remained on the market for longer.

The average shelf-life of a mortgage product rose to 22 days at the start of April, compared to 15 days in March, which means borrowers can afford to take a bit longer to compare deals and make sure they find the right option for their situation.

To fix or not to fix?

Whether you’re a first-time buyer, moving home or looking to remortgage, it’s good practice to compare the range of products available.

Even though average fixed rates have risen, locking into a deal is still likely to be the most suitable and affordable option for many borrowers as the average Standard Variable Rate (SVR) continues to stay above 8%.

But homeowners who are coming to the end of a fixed mortgage deal this year should be aware that their monthly mortgage payment could go up significantly.

“Borrowers who will come off a two- or five-year fixed rate this year may be paying between 2.50% and up to 3% more in interest on their mortgage on average. Indeed, in April 2022, the average two-year fixed mortgage rate was 2.86%, and in April 2019 the average five-year fixed mortgage rate was 2.88%,” explained Springall.

“Seeking advice is a wise choice to help navigate all the deals available and to work out which one would be the most cost-effective option,” she suggested.