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Rate gap between two- and five-year fixes narrowing: Moneyfacts

Data from Moneyfacts reveals that the rate gap between two- and five-year fixed rate mortgages has fallen to its lowest recorded level since 2013.

The current rate gap stands at 0.41 per cent, down from the 2018 average of 0.44 per cent and 0.57 per cent in 2017.

This comes from today’s average two-year fixed rate coming in at 2.50 per cent versus the average five-year fix at 2.91 per cent.

The average rate gap in 2013 was 0.27 per cent, when the two-year fix was at 3.71 per cent and the five-year, 3.98 per cent, according to the firm.

Since the start of 2019 several of the larger lenders including Barclays, HSBC, Lloyds Bank, NatWest and Santander have cut rates across two- and five-year fixed details.

Moneyfacts finance expert Rachel Springall says: “The mortgage rate war may have dulled in comparison to the golden years of cheap funding schemes, but so far this year some of the biggest lenders in the market have taken aim at their pricing to entice new borrowers… as the two-year fixed market becomes saturated with cheap deals, lenders will no doubt make efforts to compete on five-year deals.

“First-time buyers are also benefitting from lower rates and greater choice right now, with the average two and five-year fixed rates at 95 per cent LTV at new lows, at 3.42 per cent and 3.79 per cent, respectively.”


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