Mortgage rates have remained stable over the past month, with brokers reporting relief that the market has reached a protracted period of relative calmness.
The average two-year fixed rate mortgage available today (April 13) sits at 5.33 according to Moneyfacts having hardly moved from 5.32 per cent six weeks ago at the beginning of March.
Likewise, the average five-year fixed rate sits at 5.06 per cent across all loan-to-values today, up marginally from 5 per cent at the start of March.
"Average fixed mortgage rates have generally continued to edge downwards during March and April, however, the pace of decline has been slower compared to previous months,” Claire Flynn, mortgage expert at Uswitch told FTAdviser.
Some lenders have continued to cut rates, with Virgin Money this week reducing a number of its fixed rates.
Among its residential products, Moneyfacts has highlighted one of its five-year fixed mortgage deals which offers a 4.22 per cent interest rate at 85 per cent loan-to-value.
“Those borrowers looking for a competitive package with a deposit of 15 per cent may find this an attractive option,” Rachel Springall, finance expert at Moneyfacts said.
Looking at the market more broadly, mortgage brokers have said however that borrowers need to consider more than just the headline rate when deciding what deal to choose.
Ross Lacey, chartered financial planner at Fairview Financial Management, explained: “Two-year fixed rates on residential purchases are as low as 4.08 per cent with Barclays whilst five-year fixed rates are as low as 3.79 per cent with Virgin, which only recently reduced its rates to this level.
“Customers need to consider not just the headline rate though, but any associated product fees charged by the lender to get a true picture of the total cost. Larger mortgages tend to be more cost-effective on a lower-rate product with a product fee.”
While fixed-rates have remained stable or reduced slightly, variable-rates on the other hand have been tracking upwards.
According to data from Uswitch, there has been a notable jump since the Bank of England increased the base rate at the end of March.
Currently the base rate sits at 4.25 per cent after it was raised by 25 basis points towards the end of March.
Since then, the average five-year fixed rate is now lower than the average two-year variable rate deal.
Likewise, the average standard variable rate has also continued to increase in recent weeks, now sitting at 7.74 per cent on a 75 per cent loan-to-value ratio, according to Uswitch.
“For anyone currently on their lender’s standard’s variable rate, they could make significant savings by remortgaging to a new deal,” Uswitch’s Flynn noted.
Elsewhere, others in the industry have said they expect interest rates to remain at current levels or below in the coming months.
“There is potential for interest rates to continue to drop for the higher loan-to-value products, especially in relation to two-year fixed products as these are still priced on the high side,” Luke Thompson, director at PAB Wealth Management said.
“A lot will depend on how the housing market continues to perform. If the market remains reasonably quiet lenders will need to price attractively to get the business levels they require and this may fuel further cuts in the interest rates being charged,” he added.
jane.matthews@ft.com
