First-time buyers with small deposits will be pleased to hear that even those deals aimed at them are benefiting from falling rates – the cuts, it would seem, are across all loan values.
It’s the fourth month in a row two and five-year fixed rates have fallen, said Moneyfacts.
Whilst the average two-year fixed rate mortgage has fallen to 6.04% between the start of November and the beginning of December, the five-year option has fallen to 5.65% in the same time.
Meanwhile, fixed-rate deals may have become cheaper but standard variable rates (SVRs), which are the default rates lenders charge borrowers who don’t remortgage when their deal ends, have not changed.
Borrowers who don’t switch will be paying, on average, 8.19% – the highest level since Moneyfact’s records began.
It means anyone who is thinking of waiting it out when their deal ends to see if rates might fall further should consider the cost of repayments carefully.
Anyone in this situation is urged to speak to a broker for advice.
Rachel Springall, finance expert at Moneyfacts, said: “The incentive to refinance may well be in the mindset for many borrowers as we approach the new year, but for those sitting on an SVR, this may well be an even more pressing situation.
“Those coming off a two-year fixed will find the average rate is 3.70% higher on average (December 2021 versus December 2023) and that the average SVR is above 8%.
“Borrowers may then not be willing to wait for fixed rates to fall further and wish to lock into a fixed rate now for peace of mind.”
Moneyfacts has also reported the number of mortgages available has increased to 5,694 options, the highest level of availability in over 15 years. The last time there were more deals available was March 2008, it said.
But when lenders release new mortgages, they are only staying on the market for an average of 17 days – which is lower than the last month.
Springall said this showed signs lenders were vigorously repricing as the year end approached.
She added: “Lenders will no doubt be working hard to meet their end-of-year targets right now, indeed the average shelf life of a mortgage has fallen to 17 days, down from 20 days, so hopefully such vigorous repricing will result in better deals for borrowers desperate to refinance.”
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