Borrowers looking to fix their mortgage rate for five years are being urged to move quickly as these deals are becoming more expensive.
According to experts at Moneyfacts.co.uk, the average interest charged on a five-year fixed-rate deal has soared to a two-year high, reaching a level last seen in December 2016.
Uncertainty in the market has prompted increasing numbers of borrowers to sign up to these longer term deals. So much so that they account for 47% of the total remortgage market.
Yet analysis by Moneyfacts revealed their price is currently no more competitive than the average two-year fixed-rate mortgage.
Darren Cook, head of press at Moneyfacts, said: “Not only are borrowers looking for that extra peace of mind, but with lenders keenly pricing their five-year products, there is now very little difference between a traditional two-year product and its longer-term counterpart.”
Moneyfacts’ data shows the difference between two-year and five-year fixed rates has narrowed quite significantly in the last two years. Currently an average two-year fixed will cost 2.53%, which is just 0.42% lower than the five-year deal.
Cook said: “Demand for five-year fixed mortgages has grown, with figures showing that these deals account for 47% of the total remortgage market. This is unsurprising, as many borrowers look for some certainty in a very uncertain economy.
He added: “Borrowers coming to the end of their deal or sitting on an SVR who are considering a five-year fixed rate mortgage should look to remortgage as soon as possible, as with rates rising, it may be a case of now or never to secure a good deal.”
| Average rate | Dec-16 | Nov-17 | Oct-18 | Nov-18 |
| Five-year fixed | 2.96% | 2.88% | 2.91% | 2.95% |
Source: Moneyfacts Treasury Report
