Fixed-rate mortgage costs increase

By Nicholas Boyle

According to figures from moneyfacts.co.uk, the lifetime cost of a typical five-year fixed-rate mortgage has risen by £2,500 since the start of the year, The Telegraph reports.

The average interest rate charged on this type of mortgage has reached 5.66% - the highest level since June 2010.

It`s also higher than the 5.33% recorded in January. The 0.33% increase we`ve seen since then has added an extra £41.25 a month to mortgage payments on a typical five-year deal - which works out at £495 a year or £2,495 over the lifetime of the loan.

The figures also reveal that the interest rate on the average three-year fixed-rate mortgage has reached 5.19%, while a two-year fixed-rate deal is at 4.58%.

Mortgage providers have been `quick to increase their rates` on fixed-rate deals - which have proved popular with homeowners looking to protect themselves against future rises in their monthly mortgage payments.

Spokesperson at mortgage brokers Private Finance, Melanie Bien, said: "The cost of fixed-rate mortgages has soared since the start of the year as the money markets factor in a rate rise sooner rather than later. Those who have not yet secured a fixed rate will now find that the gap in pricing between trackers and fixes is significant, and likely to increase further still."

Tags: mortgage, fixed rate mortgage, interest rate

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