The average two-year fixed rate mortgage has increased for the second month in a row, reaching the highest point seen since September 2016, according to new Moneyfacts data.
Average two-year fixed rates have risen from 2.32% in April 2017 to 2.43% – just one basis point lower than the 2.44% recorded in September 2016.
Moneyfacts says this increase in fixed rates could be due to the withdrawal of products from the 60% LTV sector, which have fallen below 500 for the first time since September 2016, reaching 495.
Charlotte Nelson, finance expert at Moneyfacts, said: “After months of stagnation, both March and April’s increase on the average two-year fixed rate has now effectively cancelled out any rate reductions that may have occurred in the last 19 months. Speculation surrounding a base rate rise in May has also spiked, with providers perhaps starting to factor it in already.
“The two-year SWAP rate has risen to its highest value since August 2015, rising by 0.08% to stand at 1.11% today. As a result, providers have had little choice but to begin increasing rates to factor in the higher funding costs to their pricing.
“In recent years, the 60% LTV market has been booming. There have been vast numbers of products introduced, often at record-lows, to attract borrowers who are looking to remortgage. However, with a base rate rise looming, providers could be withdrawing deals in anticipation of this. Alternatively, it could be as a result of finding themselves oversubscribed by borrowers, who will be looking to get a better deal before rates start to rise further.
“With rates on the rise before the Bank of England has even made a decision on whether to increase interest rates, borrowers who are either coming to the end of a deal or sitting on their SVR should consider remortgaging as soon as possible. This way, they can ensure they do not miss out on a low rate before they all disappear.”