The average rate for two-year tracker mortgages has increased by 0.07% in one month, the Moneyfacts UK Mortgage Trends Treasury Report has found.
Despite the Bank of England’s cut to the base rate, the average cost of 2-year variable rate loans has increased in response to market uncertainty.
Charlotte Nelson, finance expert at Moneyfacts, said: “After the average two-year variable rate reached an historic low in September following the Bank of England’s cut to base rate, a logical assumption would have been for the market to stabilise at this new low.
“Instead, it has increased back to the level it stood at shortly after the EU referendum. This increase has effectively offset any reductions that may have occurred after the base rate announcement on 4 August.
“This increase to the average two-year tracker rate reflects the uncertainty in the market. Providers are facing heightened risks as a result of the wider economic issues such as house price stability and a potential increase to the inflation rate, which may affect household expenditure. This has likely made the low level seen in September unsustainable.
“With the fixed rate mortgage market highly competitive and lenders preferring to lock borrowers in for a longer term, there is no wriggle room to increase rates in this area. So, the variable rate market is an easy target for increased rates.
The Moneyfacts UK Mortgage Trends Treasury Report provides a monthly review of changing mortgage trends.