"Funding conditions have improved and as lenders compete harder for mortgage business a price war has broken out, sending fixed rate costs plummeting."
Remortgage fixed rates have plummeted since November, according to new analysis from L&C Mortgages.
L&C’s remortgage tracker shows that the average of the best-priced two and five-year remortgage rates from the top ten lenders has dived since the peak in November. Average two-year rates have fallen from a peak of 5.90% in November to 4.67% today, whilst five-year rates have dipped even further, to 4.32% from 5.67%.
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 £1,308 less per year for today’s two-year fixed rates and £1415 less for five-year rates compared to November.
At the same time standard variable rates continue to climb with the average of the top ten lender reversionary rates now standing at 6.73%. That would cost homeowners almost £2,600 more per year than the average five-year fixed rate at 4.32%. With another base rate rise expected this week variable rates are likely to climb higher still.
L&C has also launched a new five-year fixed rate at 4.15%. The arrangement fee is £1,395, valuation is free and there’s help with basic legal work for remortgages. A fee free version is available at 4.35%.
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.
"That underlines the fact that 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.”
