The difference between the average two-year fixed rate and five-year fixed rate is just 0.17 per cent, today, says Moneyfacts.

This is the narrowest daily gap seen since June 2013, which came a year after the launch of the Funding for Lending scheme in 2012 and is credited with creating further competition in the lending market.

Today’s rate gap implies, says Moneyfacts financial expert Eleanor Williams, “that although the cheap funding schemes are drawing to a close, the low base rate environment and demand from borrowers means that lenders are keen for business.”

Moneyfacts adds that the annualised average rate gap for 2020 was 0.27 per cent, which was the lowest recorded since 2013 too, and compares to 0.36 per cent in 2019 and 0.64 per cent in 2016.

Williams continues: “It is interesting to note that, despite the average rates increasing for two- and five-year fixed mortgages since reaching record lows in July 2020 (1.99 per cent and 2.25 per cent, respectively), the gap between the two today is even lower at 0.17 per cent, which is even more positive for potential borrowers considering longer-term fixed rates.

“While economic uncertainties continue, with wildly differing views on how house prices and indeed interest rates themselves will fare over 2021, it is still vital that the property market keeps moving. For borrowers who are concerned about market fluctuations and wish to be able to budget easily, a five-year fixed rate mortgage can provide some much-needed peace of mind and security.”