The average of the lowest fixed rate mortgage has now dropped back by more than 0.50 of a percentage point since the beginning of November, as market expectation for rates has eased since the spike caused by the ‘mini budget’, according to analysis by L&C Mortgages.
L&C’s remortgage tracker revealed that the average of the low LTV 2- and 5-year remortgage rates from the top ten lenders has fallen.
The average 2- and 5-year rates hit 5.90% and 5.67% respectively at the beginning of November but have already dropped to 5.38% and 5.07% respectively.
David Hollingworth, associate director at L&C Mortgages, said: “The reduction in fixed rates will be welcome news to borrowers reeling from the impact of the mini budget.
“Although base rate is expected to continue its climb, falling fixed rates will offer squeezed borrowers the chance of some budgeting certainty against an uncertain backdrop.
At the same time, Standard Variable Rates continue to climb with the top ten average now at 6.30%.
A borrower taking a typical £150,000 repayment mortgage over 25 years at the average 5-year rate could benefit with payments £53p.m. less than at the beginning of the month.
That would add up to a saving of more than £3200 over the 5-year period.
L&C is urging customers to take advantage of its free Rate Check service to check whether there could now be a better rate on offer than just a few weeks ago.
It’s also important to take account of fees and using a no fee adviser can add additional savings over a traditional, fee charging broker.
Broker fees will often be £500 but could charge up to 1% of the mortgage, potentially amounting to thousands of pounds.
Although fixed rates are reducing, lender standard variable (SVR) and reversionary rates are climbing as base rate hikes continue to feed through, the average of the top ten now standing at 6.30%.
Switching from the average SVR to the average 5-year fixed rate could cut the annual outgoing by more than £1330.
That saving could increase further if the Bank of England continues to raise rates, as many anticipate.
Hollingworth added: “Homeowners could already make substantial savings compared with the rates that were on offer only a few weeks ago following the ‘mini budget’.
“Those that sought to grab a rate in the panic should review their rate to make sure it still offers the best option now the market is shifting.
“Securing a better rate now doesn’t close the door to reviewing the options and good advice should help keep borrowers abreast of change without incurring additional cost.”
