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Weekly rate watch: Two-year fix drops one basis point

The average two-year fixed rate has fallen to 2.48 per cent, breaking a six-week trend, according to Moneyfacts.

The figure is down on the 2.53 per cent recorded this time last year.

Average rates within the 65 per cent LTV category, and the 90 per cent LTV both fell, from 2 per cent to 1.98 per cent, and from 2.69 per cent to 2.65 per cent, respectively.

In contrast, average rates in the 70 per cent LTV category rose from 2.53 per cent to 2.54 per cent.

Meanwhile, average rates in the 60 per cent LTV category, the 75 per cent LTV category, 80 per cent LTV category, and the 95 per cent LTV category remained unchanged.

Moneyfacts finance expert Darren Cook says: “SWAP rates have fallen which has had a knock-on effect. The 90 per cent LTV category has a large number of products in it, and a four-basis point decline has affected the overall average two-year fixed rate.

“What is interesting is that the 95 per cent LTV category has continued to remain unchanged, it would appear as if competitors are testing the water by cutting rates within the 90 per cent LTV category.

“The margins between the 95 per cent LTV category and the 90 per cent LTV are much larger than between any rates between the 60 per cent LTV category up to the 90 per cent LTV.

“The risk calculations for the 95 per cent LTV shoot up, and lenders are keen to keep the margins wide between the two highest LTV categories.”

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