Fixed mortgage rates dip in October as competition between lenders heats up
THE average two-year fixed mortgage rate has fallen for the first time in a year - with lenders choosing to swallow extra costs as they compete for customers, according to a website.
Moneyfacts.co.uk said the average two-year fixed rate on the market fell to 2.49% in October, from 2.53% in September.
It is the first time this measure has fallen for 12 months, since a record low of 2.2% was reached in October 2017, Moneyfacts said.
The Bank of England base rate was increased in August, pushing up costs immediately for some borrowers on variable rate deals.
Charlotte Nelson, a finance expert at Moneyfacts, said swap rates, which lenders use to price their loans, have also been on the increase.
"Although this would typically cause the average two-year fixed rate to rise, lenders are instead opting to swallow this extra cost for the time being in favour of retaining mortgage customers."
Some lenders may have end-of-year targets that they are looking to hit.
Ms Nelson said:
"Providers have started to reignite competition in the market to attract re-mortgage customers and retain their mortgage books."
She said borrowers coming to the end of their current deal
"would be wise to shop around and take advantage of the current competition in the market".