According to the figures, the average rate on the market is now 2.95%, up from 2.91% last month and 2.88% in November 2017.
Darren Cook, head of press at Moneyfacts, said: “Since the base rate rise in August, providers have tried to keep their five-year fixed rates as competitive as possible to attract those looking to remortgage, due to many borrowers looking to come off their standard variable rate or lock in for a longer term to mitigate any potential further rises. As a result, the average five-year fixed rate fell by 0.02% last month.
It seemed to be only a matter of time before providers increased their five-year fixed rates, as lenders could not continue to absorb the extra costs as a consequence of the base rate increase indefinitely, with many lenders having reassessed their options. Despite this, the pressure to remain competitive is far greater, and this is shown by the rate only increasing by 0.04% this month and by just 0.08% since the beginning of the year, up from 2.87%.
Demand for five-year fixed mortgages has grown, with figures showing that these deals account for 47% of the total remortgage market. This is unsurprising, as many borrowers look for some certainty in a very uncertain economy.
Not only are borrowers looking for that extra peace of mind, but with lenders keenly pricing their five-year products, there is now very little difference between a traditional two-year product and its longer-term counterpart. For example, data from the Moneyfacts UK Mortgage Trends Treasury Report shows the average two-year fixed rate currently stands at 2.53%, just 0.42% lower than the average five-year rate, which is significantly lower than the difference recorded two years ago, when it stood at 0.64%."
