The analysis was released as the BoE base rate was left on hold at 5.25% on Thursday, despite inflation having returned to a 2% target last month, for the first time since July 2021
Mortgage and savings rates have been volatile in recent months despite the BoE base rate being left unchanged, according to a financial information website.
The analysis was released as the BoE base rate was left on hold at 5.25% on Thursday, despite inflation having returned to a 2% target last month, for the first time since July 2021.
Moneyfactscompare.co.uk said that the average two-year fixed mortgage rate on the market edged up from 5.91% at the start of May to 5.93% at the start of June, having dropped from 6.04% at the start of December 2023.
The average five-year fixed-rate mortgage on the market rose from 5.48% to 5.50% between the start of May and the start of June, having dropped from 5.65% at the start of December 2023.
The average SVR, which borrowers end up on when their initial deal ends, sits at 8.18%, which is unchanged month-on-month and marginally down from 8.19% in December 2023.
Rachel Springall, a finance expert at Moneyfactscompare.co.uk, noted: The rising cost of mortgages may cause deep concern for borrowers about to come off a fixed-rate deal and needing to refinance.
She said: Affordability is a pressing point for both homeowners looking to refinance and new buyers, so those struggling to see how they can afford mortgage repayments will no doubt be desperate for interest rates to drop.
Homeowners unsure on whether to lock into a new fixed-rate mortgage may still find it more affordable than falling onto a SVR, which sits above 8%.
This rate has nearly doubled since the BoE started increasing base rate back in December 2021, she added.
Springall said that because of volatility in swap rates, which are used by lenders to price mortgages, lenders have been increasing fixed mortgage rates, as well as withdrawing some deals priced below 5%.
She added: As a result, the average two-year fixed-rate is nearing where it sat six months ago, undoing the positive rate cut momentum seen during Q1 2024.
The average five-year fixed rate has remained above 5% since June 2023, moving above and below 6% over the last six months, she said.
Springall said: At present, it is cheaper to lock into a five-year fixed mortgage than a two-year deal, based on average rates, which has been the case since October 2022.
FTBs who are struggling to get their foot onto the property ladder and do not have the ‘bank of mum and dad’ to lean on may feel getting a mortgage is too far out of reach right now, she said.
Nearly 1.6 million fixed-rate mortgages are due to end or have already ended at some point in 2024, as per trade association UK Finance.
Recent BoE numbers showed the total value of outstanding mortgage balances with arrears had hit its highest since 2014.
In Q1 2024, the value of outstanding mortgage balances with arrears rose by 4.2% from the previous quarter, to £21.3 billion, as per the mortgage lenders and administrators statistics.