Borrowers looking to switch from their standard variable rate (SVR) or from their current deal to a two-year fix can this month benefit from average rates of 2.49%.
This is down from 2.53% in September but is not as low as the average of 2.33% seen in October last year, when the Bank of England increased interest rates for the first time in ten years, signalling the start of an upward trend for two-year deals.
However, according to Moneyfacts.co.uk which has compiled these figures, the second Bank of England rate rise, which happened in August, seemed to have prompted two-year rates to go back down.
Indeed, Charlotte Nelson, finance expert at Moneyfacts, said: “Many would have assumed that the average rate would have increased in the aftermath of the base rate rise this August, however the opposite seems to be the case. Providers have started to reignite competition in the market to attract remortgage customers and retain their mortgage books.”
Lenders’ default rates increase
In the meantime, rates on SVRs – the default rate which borrowers lapse onto when their introductory deals come to an end – have risen for the second month running, reaching 4.89% in October.
This, said Moneyfacts, should provide ample motivation for borrowers to remortgage. Indeed, figures from UK Finance, the trade body representing the mortgage industry, recorded a 9.2% increase in remortgage approvals.
Nelson added: “Borrowers know only too well that low rates won’t be around forever, so anyone on an SVR or approaching the end of their deal would be wise to shop around and take advantage of the current competition in the market.”
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