The cost of the average two-year fixed rate is now three times more expensive than it was last October, according to figures from L&C Mortgages.
The recent increase to the Bank of England base rate, and the expectation that rates will continue to rise, has pushed up the cost of fixed rate deals in recent months.
The L&C Remortgage Tracker shows that both the low LTV two- and five-year remortgage rates from the 10 largest lenders have leapt again this month, posting the second biggest monthly rise this year.
The average two-year fixed deal climbed by 0.35 percentage points to 2.71% while the five-year fix rose to 2.78%.
That is a sharp increase from the historic lows of last October when the average two- and five-year fixed rates were at just 0.89% and 1.05% respectively.
L&C says this means a borrower taking a typical £150,000 repayment mortgage over 25 years would face increased monthly payments of £125-130 — adding up to a total of £1500 more per annum in payments when compared to last year’s low point.
However it says that despite this increase fixed rates remain low by historical standards, and are still significantly lower than the average standard variable rate — which currently stands at 4.51%.
L&C Mortgages associate director David Hollingworth says: “The rate at which mortgage rates have been moving has been astonishing and many lenders have continued to make changes to their rates week in week out, making it difficult for borrowers to keep tabs on the market.
“With so many cost increases impossible to avoid, the mortgage remains an area where households can take positive action.
“Fixed rates understandably appeal to those looking to put some certainty into their single biggest outgoing. We’ve seen more borrowers looking to secure a rate further ahead of the end of their current deal, in an effort to get ahead of the increases.
“As the cost of living rises and lenders feed rate increases through into their affordability calculations, it will be important for borrowers to make the right choice from a criteria perspective as well as focusing on the best rates.”
