New research from Halifax has found that fixed rate mortgages fell to their lowest levels in in 2015, while the standard variable rate remained static.
The average interest rate on a new fixed rate mortgage fell 0.59% last year to 2.66%, compared with the average standard variable rate of 4.49%. The gap between the two has widened by 1.81 percentage points since August 2012.
This means the amount homeowners could be saving by switching to a fixed rate deal has increased by 50% in the past two years.
Halifax said that the average monthly payment of a homeowner who took out a two-year fixed rate on a £100,000 mortgage in November 2013 would have been £485. The payment on a standard variable rate mortgage would have been £551, a monthly saving of £66.
A borrower taking out a fixed rate in November 2015 would be paying £457 a month on a £100,000 loan compared with £555 on the average standard variable rate. This gives a saving of £99 a month, 50% higher than two years’ earlier.
Craig McKinlay, mortgages director at Halifax, said: “With base rate remaining at record low levels for another year, fixed rate mortgages fell further in 2015. Over the past three years average rates have fallen sharply, significantly widening the gap between them and standard variable rates. As a result, borrowers have been able to make considerable savings.
“Whilst remortgaging activity has picked up in the last year, this is only in line with new loans. As a result, remortgage activity’s share of all lending has remained relatively subdued, especially when compared to its strength in 2008. Without the concern of a base rate rise in the immediate future it seems borrowers’ appetite to remortgage has been dulled, meaning that some could be missing out on significant savings.”
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