Borrowers looking for a new fixed-deal could benefit from these new prices which – whilst much higher than rates they locked into two or five years ago – are lower than they were in the summer.
Today, for a two-year fixed rate mortgage, the average rate is 6.47% but just a month ago a borrower would typically be paying 6.7% for this kind of deal.
Meanwhile, for those locking into a five-year mortgage the typical rate is currently 5.97% which is well below the high of 6.19% reached in September.
Rachel Springall, finance expert at Moneyfacts, said: “Fixed mortgage rates have fallen across the spectrum, signalling a positive change in the market.
“Overall, the average two- and five-year fixed rates have now fallen for the second month running, so borrowers could find cheaper deals to choose from.
“These are encouraging signs for borrowers who may be looking for a new fixed rate deal, but they still may be on the fence about locking in, hoping rates will fall further in the weeks to come.”
For those borrowers who have low deposits or equity, the interest rates on mortgages have fallen below 6% for the first time since July. Moneyfacts said the average five-year fixed rate for those with a 90% loan-to-value (LTV) mortgage had dipped to 5.78%.
Why not switching could be costly
Although these rates are all still much higher than they were two years ago, before the Bank of England began its rate hiking cycle and the mortgage crisis kicked off, it will still pay to remortgage to a new deal rather than stick with your lender’s revert rate.
Indeed, the Moneyfacts data showed this time two years ago the average two-year fix was 2.25% meaning mortgage prices have more than doubled in this time.
However, the price of the rate to which you will revert if you don’t find a new deal when your current arrangement ends, will be even higher.
Moneyfacts said these rates – called standard variable rates (SVRs) – are currently averaging 8.18%.
Springall said this was a record high. “This rate has risen by 3.78% since the start of December 2021 and there may be borrowers either stuck or deciding to sit on their revert rate, hoping fixed rates will fall in the weeks to come.
“Borrowers would be wise to seek independent advice to go over their options or speak with their lender if they are struggling to make repayments.”
