How have fixed mortgage rates changed over the past year?

Despite the Bank of England’s base rate holding steady at 5.25% since August 2023, the average fixed mortgage rates for two- and five-year deals over the past year have fluctuated, analysis of internal data by Mojo Mortgages has shown.

The analysis is based on deals from five major UK lenders: Santander, Nationwide, NatWest, Halifax, and HSBC.

According to Mojo, the lowest average rate for a two-year fixed mortgage was 4.9%, while the highest was 6.5%. For a £200,000 mortgage with a 25-year term, this results in monthly payments of £1,157 at 4.9% and £1,350 at 6.5%, a substantial difference of £193 per month.

The five-year fixed mortgage rates ranged from 4.5% to 6%, translating to monthly payments of £1,111 at the lower rate and £1,288 at the higher rate, a £177 difference.

“This data paints a fascinating picture of the mortgage market’s volatility over the last year despite the Bank of England’s base rate remaining the same since August 2023,” said Claire Flynn (pictured), senior content editor at Mojo Mortgages.

Noting the difference between the lowest and highest rates, Flynn highlighted the importance of professional advice in securing favourable mortgage rates. She also addressed potential future rate changes, stressing the complexity of factors influencing mortgage rates and the uncertainty of their trajectory in the second half of 2024.

“We’ve witnessed the average mortgage rate for a two- and five-year fixed mortgage change drastically, confirming the complex factors that impact mortgage rates overall,” Flynn said. “This is why it’s also difficult to know what will happen to mortgage rates in the second half of 2024 and whether – or even – when they will fall.”

Explaining why mortgage rates remain high, Flynn cited the Bank of England’s efforts to control inflation by raising the base rate, which affects tracker mortgages, variable mortgages, and fixed-rate mortgage deals influenced by swap rates. The economic fallout from the September 2022 mini budget also impacted fixed rate mortgages.

Regarding whether to wait for rates to fall before getting a mortgage, Flynn advised that this decision depends on individual circumstances.

“If you are due to remortgage soon, the average standard variable rate is still above 8% which is higher than most of the other fixed or variable deals on the market,” she said. “So, waiting for rates to fall could end up costing you a lot in the short term.

“For those looking to buy, only you can decide whether it’s the right time to move or get on the property ladder. But if you do see a property you like, remember that it may not still be available when or if mortgage rates do fall.”

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