Jump in average fixed mortgage rates recorded in December, says Moneyfacts

The average five-year fixed-rate mortgage rate on the market recorded the biggest month-on-month jump seen since August 2023 between November and December this year, according to a financial information website.

At the start of November, the average five-year fixed-rate mortgage across all deposit sizes was 5.09%. But by the start of December, this had jumped by 0.19 percentage points to 5.28%, Moneyfacts said.

The average two-year fixed-rate mortgage on the market jumped by 0.13 percentage points, from 5.39% in November to 5.52% at the start of December.

Fixed mortgage rates are typically lower now than they were at the start of the year. At the start of January 2024, the average five-year fixed rate was 5.55%, while the average two-year fixed-rate deal was 5.93%.

The Bank of England base rate has been cut twice this year, but Rachel Springall, a finance expert at Moneyfacts, said some fixed rates have recently ticked upwards amid volatile swap rates, which are used by lenders to price deals.

She added that “one positive outcome” was a slight uptick in product availability, and a calming in the average shelf life of a mortgage, which rose from 17 days in November to 21 days in December.

Ms Springall said: “This indicates that lenders are not repricing or pulling deals as aggressively as they were during October. However, lenders will now need to grapple with any future uncertainty surrounding interest-rate pricing while aiming to hit any year-end targets.

“Borrowers will hope that mortgage rates will drop next year, and while there is speculation over multiple cuts to the Bank of England base rate, stubborn inflation can delay such decisions. In addition, the present market proves that a base-rate cut does not always mean fixed mortgage rates will immediately fall if there are other economic challenges in play for lenders to consider.

“First-time buyers may well be struggling to amass a large enough deposit to get their foot onto the property ladder, but in good news the number of deals at 95% loan-to-value (LTV) now stands at its highest point in over two years.”

Moneyfacts counted 365 deals available at 95% LTV.

Overall, it counted 6,486 mortgage products available at the start of December, up from 6,402 at the start of November.

Ms Springall added: “Those stuck paying rent may feel their homeownership dreams are scuppered because of the lack of affordable housing, which will take time to improve.

“As we move into 2025, it will be interesting to see how lenders will balance supporting their existing customers and enticing new business as the future of interest rates remains unpredictable.”

The research was released as Barclays announced that, from Tuesday, it is reducing rates across its five-year fixed-rate homeowner purchase and remortgage range.

The revamp includes a five-year fixed-rate house purchase deal with no product fee for borrowers with a 40% deposit, reduced from 4.34% to 4.20%.