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Fixed mortgage rates continue to climb above 6% as choice of products improves

Average fixed mortgage rates are continuing to climb, pushing up costs for borrowers.

Earlier this week, the average two-year fixed-rate deal topped 6% for the first time in 14 years and the average five-year fixed rate hit 6% for the first time in 12 years, according to data from Moneyfacts.co.uk.

Moneyfacts said on Friday that, across all deposit sizes, the average two-year fixed-rate mortgage on the market is 6.16%, having edged up from 6.11% on Thursday and 6.07% on Wednesday.

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The average five-year fixed-rate mortgage is now 6.07%, having been 6.02% on Thursday and 5.97% on Wednesday.

Many deals disappeared from the market amid the fallout from the recent mini-budget. Bank of England base rate hikes in recent months, amid soaring inflation, have also had an impact.

Moneyfacts previously calculated that, based on Thursday’s rates, someone with a £200,000 mortgage, paying it back over 25 years could end up paying around £5,000 per year more for a two-year fixed-rate deal than they would have done last December.

Across the market, the choice of mortgage products is gradually increasing after contracting sharply last week.

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Moneyfacts counted 2,533 products on Friday, up from 2,430 on Thursday.

The total is still significantly down from 3,961 on the day of the mini-budget.

Tom Bill, head of UK residential research at Knight Frank, said: “We may see mortgage rates fall to some extent if financial markets become more reassured by the Government’s economic plan, but the events of the last fortnight have been a reminder that the era of ultra-low rates is coming to an end.”

Source: The Impartial Reporter

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Fixed Rate Top Choice For Property Investments

Most property investors are choosing fixed rate mortgages for their property investments according to the latest research.

Mortgages for Business found that in the second quarter of this year, a massive 93 per cent of all buy to let property investors chose a fixed rate mortgage, with five-year fixed rates becoming increasingly popular.

As the economic outlook remains uncertain, 69 per cent of landlords chose a five-year fixed rate mortgage during the last quarter.

The research also found that an increasing number of lenders are offering products free from arrangement fees. In Quarter two, 20 per cent of all products had no fee attached.

The average flat arrangement fee, however, increased slightly in the quarter to an average of £1,389.

Remortgaging continues to be far greater than mortgages for new property purchases, though when mortgaging for a new property landlords are increasingly using limited companies.

Overall, pricing remained fairly flat in the second quarter despite an increase in swap rates, suggesting that lenders continue to absorb costs in order to remain competitive.

CEO of Mortgages for Business, David Whittaker, said: ‘We’ve been recommending five-year fixed rates for a long time. At the moment there is very little difference in pricing between fixed and variable rate products. In today’s uncertain economic climate, particularly the road crash Brexit negotiations, fixing makes a lot of sense, especially as the average price is just 3.52 per cent. Why wouldn’t landlords make them a part of their business strategy?’

Buy to let property investors certainly seem to be taking a conservative approach with mortgaging their property portfolios as new private rental sector regulations on tax and stamp duty begin to bite. Fixed rate mortgages in the buy to let sector are dominating the market at the moment and seem likely to continue to do so.

Source: Residential Landlord