Remortgage rates have plunged in the last year as more lenders have introduced sub-4% mortgages for homeowners looking to renew their deals.
This is according to the latest data from Defaqto which has also revealed the difference in prices between two-year fixed rates and five-year fixed rates is narrowing.
It said this could mean more borrowers may opt for longer-term deals going forward in order to lock into better rates for extended periods.
The financial ratings company said the global uncertainty caused by Donald Trump’s tariff plans has continued to impact UK mortgages rates.
Although it has raised fears of a global recession it has prompted mortgage lenders to cut rates in the last few weeks.
Defaqto has specifically zoned in on remortgage rates as one million homeowners are expected to roll onto new deals this year.
Its analysis showed how a number of big lenders now have products with rates of under 4% for remortgages.
Yet this time last year, Defaqto’s data showed, remortgage rates were as high as 5.59% for a two-year fixed rate for those with at least 15% equity.
As the table by Defaqto below shows, there are now both two-year fixed rates and five-year options with rates below 4%. These are all, however, for borrowers with at least 40% equity.
| Provider | Product | Initial Rate Payable | Fees Payable |
| Yorkshire BS | 2yr 3.98% Fixed LTV 60% | 3.98% | £995 |
| First Direct | 5yr 3.99% Fixed LTV 60% | 3.99% | £490 |
| HSBC | 5yr 3.99% Fixed LTV 60%* | 3.99% | £999 |
| Nationwide BS | Flex 5yr 3.99% Fixed LTV 60% | 3.99% | £1,499 |
* Only available to Premier account customers
Katie Brain, Banking Expert at Defaqto said it was good news for homeowners.
“We could start to see more homeowners taking out longer term fixed mortgages, as the difference in rates between a two-year and a five-year product shrinks,” she said.
“When rates increased, many people were reluctant to fix for too long. Now we’re seeing those rates come down, those that want the financial stability of knowing their mortgage payment is fixed for a prolonged length of time may start to reconsider those five-year products or even longer.
“In April last year the difference between the rates for a two-year product versus a five-year product was in some cases as high as 0.66%. Now, for some LTVs there is less than 0.20% difference between the advertised rates.”
Best Remortgage fixed rates based on £150,000 loan (Source: Defaqto)
| Term | LTV | Provider | Product | Initial Rate Payable | Fees Payable |
| 2 Year | 60% | First Direct | 2yr 4.13% Fixed LTV 60% | 4.13% | £490 |
| 85% | Santander | 2yr 4.63% Fixed LTV 85% | 4.63% | £999 | |
| 5 Year | 60% | First Direct | 5yr 3.99% Fixed LTV 60% | 3.99% | £490 |
| 85% | Santander | 5yr 4.39% Fixed LTV 85% | 4.39% | £999 |
