Average two-year fixed rate hits 6.15%
The average 2-year fixed rate rose to 6.15% on Wednesday, according to Moneyfacts, up from 6.07% on Tuesday. UK newswire, Newspage, asked brokers for their thoughts, below.
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What even is an 'average' 2-year fixed rate? It's exactly this sort of content being pushed out that highlights the need for professional advice right now so people can make informed decisions. We have a 2-year fixed rate for a first-time buyer at 95% LTV, at 6.04%, and a 75% LTV remortgage under 5.3%. So I struggle to see where this 'average' comes from. Clients should always seek professional advice before making any commitments.
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Publications need to stop pushing the term 'average' rates. There is no such thing as an average customer or average circumstances, so they can be very misleading. I have just quoted a 2-year fixed rate to a customer at 5.34%, way below the 'average' figure. if they are going to publish numbers, use real examples. That would constitute much better and more reliable reporting rather than headline-grabbing articles.
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Today's inflation data did nothing to help calm the volatility in mortgage pricing. If anything, it signalled that even choppier waters lie ahead. This is especially the case considering the Bank of England is now expected to increase the base rate by 50 basis points tomorrow. I cannot remember seeing the outlook this bad and the government needs to give this issue the attention it deserves.
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The average rate isn't helpful and the media should be more careful with these types of comparisons as we can still access rates that are lower than this. However, it's fair to say that rates are going to continue to increase and unfortunately this morning's inflation figures will have done nothing to calm the markets and instil confidence that the Bank of England or the government have control of the situation. Tomorrow will be a true test. Will a significant rise in the base rate tomorrow be seen as panic by the Bank of England or, if they are more cautious, will it signal continued complacency about the whole situation?
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Whilst 6.15% is an average, anyone with a smallish deposit will likely be paying a similar rate to this. Inevitably, buyers will stay out of the market or vendors will need to accept reduced offers. Either way, the downward pressure on house prices is set to increase dramatically over the next few months. The chickens are well and truly coming home to roost.