Average two year fixed rate breaks 7% barrier

Darren Cook, mortgage expert at Moneyfacts.co.uk, comments: "As predicted by Moneyfacts, the average rate for two-year fixed rate mortgages available on the market today breaks the 7% barrier and stands at 7.02%. Anyone looking to fix their mortgage for five years is also paying the price as the average rate on offer now increased to 6.82%.

"This increase is a result of the two-year swap rate reaching 6.52% last week. Any increased cost to lenders in arranging the funds on the money market is passed on to customers. Lenders are also taking an increased margin on top as they price their products for risk.

"The average SVR today stands at 7.02%. With most lenders not charging a product fee for moving onto their SVR, this is becoming a more viable option for many at the moment.

"As the rates on offer increase, so does the relative risk. More and more borrowers are likely to find the increased repayment too much to bear.

"These are continuingly worrying times for anyone coming to the end of their current mortgage deal. However, it seems not all is lost as there could be some light at the end of the tunnel for borrowers. Today, swap rates have decreased from its 6.52% high last week, by 0.16% to 6.36%. We hope that this recent downturn is not short lived and trust that lenders will play a fair game by reflecting this decrease in the rates that they will have on offer in the next few weeks."