Borrowers who are considering remortgaging will benefit from cheaper rates if they switch now.
According to the latest data, the average two-year fixed rate mortgage is currently on the market for a rate of 2.49% which is down from 2.53% in November 2018.
While anyone who remortgaged at the end of last year would have missed out by only weeks on these new, lower rates mortgage experts at Moneyfacts, which compiled the data, are urging anyone currently sitting on their lender’s standard variable rate (SVR) to take advantage of the deals.
Switching from a default rate
Indeed with the average SVR currently standing 4.89%, the repayments on the average fixed-rate deal are much lower.
Moneyfacts said, based on a £200,000 mortgage over a 25-year repayment term, it would cost £896.23 per month which is £260 less per month than the repayments on the SVR mortgage, which borrowers automatically revert to if they don’t switch when their current deal expires.
Rachel Springall, finance expert at Moneyfacts, recommended HSBC’s two-year fixed remortgage package, which offered loans of up to 80% of a property’s value.
The rate on this product was 1.64% and it comes with a free valuation, free legal fees and a £999 product fee. Springall said remortgagers locking in at this rate could save £343.30 per month compared to their lender’s SVR.
HSBC is not the only lender offering competitive deals, however. Moneyfacts also highlighted Barclays, Santander and TSB as banks which have recently cut rates on their two-year fixed rates in the past fortnight.
It explained, when big lenders like this push down rates, it can signal for others to follow.
Housing market anxieties
Springall said the housing market was feeling the ‘anxieties’ of economic uncertainty and while house price falls were good news for buyers, they were not so beneficial for homeowners who were hoping their equity share would increase for refinancing purposes.
She added: “Borrowers must be aware that this current lending environment is unlikely to continue indefinitely and lenders could slow down this aggressive pricing if they see fit, meaning rates may rise as they did between March and November last year, when they increased by 0.14%.
“Therefore, any borrowers yet to refinance or who are adopting the “wait and see” approach when deciding on whether or not to make a house purchase might want to consider doing so if they are anxious about ongoing uncertain economic factors.”
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