The average two-year fixed rate mortgage fell from 5.93% in January to 5.56% in February, according to data from Moneyfacts.co.uk.
Meanwhile, those considering fixing for five years will find the rate has dropped from 5.55% to 5.18% in the same time.
Moneyfacts said the two-year fixed mortgage rate fall was the biggest since 2022.
But, as the data was released, Nationwide announced it had increased its tracker and fixed-rate mortgages by 0.25% in response to climbing SWAP rates, which are one of the important factors lenders use to decide their pricing.
For borrowers this may add an element of confusion – especially for those who were hoping prices may go a little lower in time for their remortgage.
Rachel Springall, finance expert at Moneyfacts, said: “Borrowers searching for a new mortgage deal may be delighted to know fixed mortgage rates continued their downward trend.”
But she added: “Those borrowers who have waited patiently in recent months to refinance, or indeed are preparing for when their mortgage deal expires, would be wise to review rates, as lenders are closely monitoring the volatile swap rate market, which tends to influence fixed rate pricing.
“There have been big expectations for fixed rates to fall further, and whether now is the right time to refinance will come down to an individual’s circumstances. Lenders are in constant review of their ranges, and it is likely rates will fluctuate in the coming weeks due to the noises surrounding future rate expectations.”
Mortgaging options – what should borrowers do?
Currently the average Standard Variable Rate (SVR), which is the deal borrowers revert to when their current deals ends, are 8.17% according to Moneyfacts.
So, anyone planning to sit on their SVR in the hope the market might fall will be paying a great deal more to do so.
The average two-year tracker mortgage, meanwhile, is current 6.15%. These mortgages rise and fall in line with the Bank of England base rate.
But Moneyfacts also revealed product choice had also fallen for the first time since July meaning there were fewer mortgages on the market.
Lewis Shaw, owner and mortgage expert at Shaw Financial Services, speaking via the Newspage agency said: “It wouldn’t surprise me to see a few more lenders pull market-leading rates this week, as they’ll now be under the cosh with service levels while trying to keep an eye on their profit margins.
“Let’s hope this doesn’t trigger a self-fulfilling spiral of higher rates as mortgage holders rush to secure products, leading to lenders getting swamped with applications and only having the rate mechanism to turn the tap off.”
For anyone in the process of buying a home or looking for a remortgage speaking to a broker could help to navigate the current market with its unpredictable pricing.
For whilst Nationwide announced price increases this week, Santander has revealed price cuts.
And borrowers should also be prepared and ready to move quickly.
Amit Patel, adviser at Trinity Finance who was speaking through the Newspage agency, said: “Nationwide announcing a rate hike on the day Santander announced a rate reduction shows the conundrum lenders are facing with rising swap rates and competition for business.
“In an unstable market it would be prudent for borrowers to have all their paperwork in order so they can secure the best deal whilst they are available.”
