A typical five-year fixed rate deal has plunged from 5.8% in December to 5.63% this month, according to the latest mortgage analysis from Moneyfacts.co.uk.
Standard variable rates (SVRs), which are the prices borrowers revert to when their deal ends and they don’t remortgage, have increased once again to 6.64% – the highest on Moneyfacts’ records since November 2008.
Rachel Springall, finance expert for Moneyfacts, said the fall in fixed-rate prices will come as a ‘relief’ to borrowers who have been concerned about interest rates since the mortgage chaos ensued at the end of September.
But they are not out of the woods yet, indeed, Springall said rates were still far higher than a year ago and ‘more improvement would be welcomed for those with a limited deposit’.
The data showed, the average two-year fixed rate mortgage at 95% loan-to-value – for those with a 5% deposit – remains above 6%.
And Springall also urged caution to anyone considering lingering on their lender’s SVR until the market calms down.
She said: “The consecutive Bank of England base rate rises have fuelled a rise to the average SVR, which has now reached 6.64% the highest on Moneyfacts records since November 2008 (6.77%), making it imperative for borrowers to check their rate and consider remortgaging.
“As existing mortgage holders weigh up their refinancing plans and others debate their home purchase desires in 2023, it is imperative they seek independent financial advice to go through the options available to them.”
Will mortgage rates drop further?
Today’s report also revealed the availability of mortgage products had also improved significantly this month. Back in the chaos of October there were 2,258 deals on the market, but this has now increased to 3,643.
Moneyfacts said the month-on-month figures had become more stable, which was positive news.
With things looking more settled, does this mean prices could come down further for borrowers as 2023 progresses?
Springall said: “The cost-of-living crisis and inflated interest rates over recent months may well impact borrowers’ intentions of getting a new deal.
“However, it is anticipated that fixed interest rates will fall further in the months to come to entice new business.”
