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Fixed rates will continue to rise in price
Published: 23 June 2009
Average fixed rate rose 0.21% in one week, Moneyfacts.co.uk has reported.
The average two-year fixed rate mortgage has jumped 0.16% since the beginning of the week from 4.74% on Monday to 4.90% today.
The average five-year fixed rate mortgage has jumped 0.21% since the beginning of the week from 5.61% on Monday to 5.82% today.
Overall number of residential fixed rate deals has declined from 937 to 887.
Michelle Slade, analyst at Moneyfacts.co.uk, said: "After a period of relative calm in the mortgage market, lenders are stumbling over each other to increase fixed rate mortgages. The last time we saw such frantic activity was at the end of June 2008, when the average two year fixed reached a staggering 7.08%.
"The recent increase can be attributed to the hike in swap rates that we saw a few weeks ago. Just like last time, lenders are quick to pass any increase in the cost of wholesale funding on, but are never quite as quick to reduce rates when the cost of funding declines.
"In June 08, when the average rate hit its peak the margin over swaps was 0.76%. Today the margin is 2.35% and it is hard to forsee anything other than fixed rate increasing even further."
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