The average two-year fixed rate has breached 3% for the first time in over seven years, according to Moneyfacts.

The financial information provider said that average mortgage rates continue to increase, with a 0.17 percentage point increase in two-year fixed rates in April – the seventh consecutive monthly rise.

At 3.03% two-year fixed deals are at the highest level since March 2015 and up by 0.69 percentage points since December 2021 alone.

Overall five-year fixed rates also increased for a seventh consecutive month, rising by 0.16% since last month to 3.17% – the highest level recorded since May 2016, having gone up by 0.53% since December 2021.

Eleanor Williams, finance expert at Moneyfacts, said: “The mortgage sector has demonstrated great resilience during unprecedented times, buoyed by the level of demand for the limited supply of housing stock available and the great ‘race for space’ as many people re-evaluated their property needs.

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“The sector could continue to be fuelled by a shift in focus as remortgage borrowers, spooked by Bank of England rate rises, hurry to secure some financial stability and rush to lock into a fixed deal to protect themselves from further rate increases. This move may particularly be true for those who, by virtue of house price growth, could take advantage of increased equity in their home to potentially secure a lower rate.”

Low deposit mortgage rates rise

First-time buyers are being hit by rising rates too.

The average two- and five-year fixed rates at 95% of the property’s value have also risen month-on-month to 3.35% and 3.47% respectively.

However, not only are these average rates still lower than a year ago, but product availability has continued to improve, rising by a further two deals this month to 369 – the most on offer since before the pandemic in March 2020.

Williams added: “First-time buyers could understandably be feeling disheartened by the combination of rising house prices, mortgage rates surging and increases in their cost of living impacting on affordability.

“They may therefore take a small glimmer of hope from the fact that, at 369 deals, the provision of products offered at 95% LTV is at its highest since pre-pandemic March 2020 (391). The average two- and five-year fixed rates at both 95% and 90% LTV may have risen month-on-month, these are the only two lending tiers where the average rates remain lower now than they were at this time last year.”