Fixed and variable mortgage rates up after Bank raises interest rates

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ixed mortgage rates generally increase, as well as some convertible deals that directly track the Bank of England base rate, the analysis found.

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The Bank of England’s base rate rose 0.15 percentage points to 0.25% in December 2021.

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Financial information website Moneyfacts found that the overall average rate for term tracker mortgages has risen in line with this uptick, from 3.38% in December to 3.53% this month.

At variable rates some homeowners may consider locking in a new fixed deal to give themselves some certainty over their future spending, especially as other household bills such as energy are rising.

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Moneyfacts said the average two- and five-year fixed mortgage rates on the market have increased for the third month in a row.

The average two-year fixed deal increased from 2.34% in December 2021 to 2.38% in January 2022.

And the average five-year fixed rate increased from 2.64% in December 2021 to 2.66% in January 2022.

Mortgage rates are fueling an increase in most deposit sizes — but there’s some better news for first-time buyers who tend to hold smaller deposits.

Moneyfacts found that the average two- and five-year fixed rate mortgages for borrowers with 5% deposits outweighed the overall trend, and have been falling for nine consecutive months.

At 3.06% and 3.33% respectively, the current average rates in this bracket are the lowest on record for Moneyfacts.

Eleanor Williams, a finance expert at Moneyfacts, warned: “With the Bank of England likely to implement further hikes in the base rate in the coming months, there is no guarantee that the cost of borrowing on mortgages will increase overall. Will not stay.

“The threat of rising inflation and the potential for cost of living to rise and squeeze the household budget even further, may prompt borrowers to act sooner, perhaps considering securing a new mortgage deal. have planned.”

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