The proportion of those on two-year fixed rates has seen a decrease of a similar magnitude over the same period, suggesting an increasing number of borrowers have been ?locking in for longer ? to take advantage of the near-record low rates. įurthermore, the proportion of fixed rate mortgage borrowers opting for five-year fixed rates has increased significantly in recent years, from fewer than three in ten borrowers in 2017 to around 45 per cent of borrowers in 2021. Therefore, a sizeable majority of borrowers will see no immediate increase in their monthly repayments. Currently, 74 per cent of homeowner mortgage s are on a fixed rate contract, with 96 per cent of new borrowers choosing this option since 2019 ( as shown in Chart 2). This rise in the B ank R ate is the smallest since 1989, so even if mortgage rates move more in line with Bank R ate than has been the case in recent years, the effect on mortgage rates will be commensurately modest.Ĭhart 2: Proportion of new homeowner mortgages taken out on a fixed rateįor most mortgage borrowers, the change in the B ank R ate will have no effect on their mortgage rate in the short term. S trong market competition and ready supply of wholesale funding have been important drivers in keeping rates low. For the few modest increases in Bank R ate over 20, mortgage rates did not rise by the same margin and returned to their gradual downward trend shortly after. How the B ank R ate affects mortgage ratesĬhart 1: Relationship between the Bank Rate and mortgage ratesĪs shown in C hart 1 above, recent history tells us mortgage rates have declined gradually to near-record lows while the B ank R ate has remained largely static.
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