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As providers continue to revise and re-price their product ranges, the average overall two- and five-year rates have increased sharply this month, according to the latest data from Moneyfacts.

The latest Moneyfacts UK Mortgage Trends Treasury Report shows that both had experienced the largest month-on-month rises since 2007 when it started recording data.

The average overall two-year fixed rate has risen for a ninth consecutive month.

At 3.74%, the overall average two-year fixed rate has increased by 0.49% month-on-month.

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Data found that it has increased by 1.40% compared to December last year (2.34%), the highest Moneyfacts has recorded since May 2013 when it stood at 3.80%.

At 3.89% the overall five-year fixed-rate average has also risen for nine successive months and is the highest on Moneyfacts’ records since November 2014 when it hit 3.93%.

Following the month-on-month rise of 0.52%, this rate is now 1.25% above the equivalent rate recorded in December last year when it reached 2.64%.

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The average two-year tracker rate has climbed to 2.74% after an increase of 0.20% compared to last month and is now the highest recorded since June 2014.

Since December last year, this average rate has risen by 1.16%, which is broadly in line with the 1.15% base rate that has gone up over this period.

The average Standard Variable Rate (SVR) has breached 5% for the first time in more than 13 years, after reaching 5.06%.

When compared to December 2021 (4.40%), prior to the first of the recent base rate rises, this has gone up by 0.66%.

However, at 5.06%, this is now the highest Moneyfacts has recorded since January 2009 when it was 5.14%.

Commenting on the latest figures, Moneyfacts finance expert Eleanor Williams says: “Product choice took another dip this month as mortgage lenders continue to revise their ranges in the face of ongoing economic uncertainty.”

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“We have seen some providers pull selected products, while others have withdrawn whole sectors of, or indeed their entire ranges, from the market temporarily. Compared to last month, total availability has reduced by a notable 431 deals to leave 4,556 mortgage products on offer to borrowers this month.”

“This is just 44 more deals than were available this time last year, although at just 23 days the product shelf-life is seven days shorter than the 30 days this stood at in July 2021, reflecting the current pace of provider updates.”

“As product ranges have condensed, average fixed rates have continued on an upwards trajectory, with two- and five-year fixed averages at all loan-to-value (LTV) tiers rising this month.”

“There are numerous factors which affect fixed rate pricing, rather than it simply tracking the Bank of England base rate. Providers take into account many influences, such as funding, swap rates, pricing pressures from other providers, and being able to maintain their service levels, among others.”

Speaking on SVRs, Williams adds: “Although the difference between this rate and the average fixed rates has reduced in recent months, for eligible borrowers about to fall onto a revert rate, the incentive to lock into a new fixed deal is still clear. Those switching from the average SVR to the current average two-year fixed rate might be able to make monthly savings of nearly £150.”

By Becky Bellamy

Source: Mortgage Finance Gazette

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