The average of the lowest fixed rate mortgages has plummeted as a mortgage price war takes hold, according to analysis by L&C Mortgages.
L&C’s remortgage tracker has revealed that the average of the best low loan-to-value (LTV) 2- and 5-year remortgage rates from the top ten lenders has dived since the peak in November.
The average 2-year rates have fallen from a peak of 5.90% in November to 4.67% today, whilst 5-year rates have dipped even further, to 4.32% from 5.67%.
David Hollingworth, associate director at L&C Mortgages, said: “The rollercoaster ride for mortgage borrowers continues and many may have lost track of how much fixed rates have improved since the pandemonium following the mini-Budget.
“Funding conditions have improved and as lenders compete harder for mortgage business a price war has broken out, sending fixed rate costs plummeting.
“As a result, the cost of the current best in class fixed deals is potentially thousands per annum lower than just a few months ago.
“That said, rates remain higher than the lows of recent years and those coming toward the end of a fixed deal will need to plan ahead.
“However, we expect rate cuts to continue even though another base rate increase could come as early as this week.”
Rates have fallen to such a degree that borrowers could now benefit from payments over £100p.m. lower for a typical £150,000 repayment mortgage over 25 years.
Those seeking the security of a fixed rate now would pay £1308 less per annum for today’s 2-year fixed rates and £1415 less for 5-year rates compared to only a few months ago.
At the same time lender Standard Variable Rates (SVR) continue to climb with the average of the top ten lender reversionary rates now standing at 6.73%.
That would cost homeowners almost £2600 more per annum than the average 5-year fixed rate at 4.32%.
With another base rate rise expected this week variable rates are likely to climb higher still.
L&C’s free Rate Check service allows borrowers to see if they could benefit from a lower rate than they could have secured only months ago.
Often lenders will allow borrowers to take advantage of a new, lower rate rather than hold them to the rate available at the point of application.
That allows homeowners coming to the end of their fixed rate in coming months to secure a rate now and keep it under review to see if it can be bettered before they complete.
L&C has also launched a new exclusive 5-year fixed rate with the lowest rate on the market at 4.15%, ideal for borrowers wanting to know where they stand over the medium term.
The arrangement fee is £1395, valuation is free and there’s help with basic legal work for remortgages.
A fee free version is available at 4.35%.
Hollingworth added: “Those who may have decided to hold tight on their standard variable rate should urgently review their options, as SVRs are often already around 7% or more.
“Even if they prefer to keep their options open, a penalty free tracker could offer a better holding position.
“However, many borrowers will prefer the security of a fixed rate so they at least know where they stand with their biggest outgoing.
“The fixed rate improvements mean that rates are now at the lowest level since the mini-Budget sent them into orbit.”
