Payments now more than £1,300 per annum lower than in November
The average of the lowest fixed rate mortgages has plummeted as a mortgage price war has intensified, data analysis by fee-free mortgage adviser L&C Mortgages has revealed.
L&C’s remortgage tracker has found that the average of the best low loan-to-value two- and five-year remortgage rates from the top 10 lenders has fallen since the peak in November 2022. The average two-year rates have plunged from a peak of 5.90% in November to 4.67% today, while five-year rates have dipped even further, from 5.67% to 4.32%.
L&C said rates have fallen to such a degree that borrowers could now benefit from payments over £100 per month 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 annum for today’s two-year fixed rates and £1,415 less for five-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 10 lender reversionary rates now standing at 6.73%. That would cost homeowners almost £2,600 more per annum than the average five-year fixed rate at 4.32%. With another base rate rise expected this week, the mortgage adviser said variable rates are likely to climb higher still.
“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,” David Hollingworth (pictured), associate director at L&C Mortgages said. “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.”
Hollingworth added that those who have decided to hold tight on their standard variable rate should urgently review their options.
“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.”
L&C introduces exclusive five-year fix
L&C has also launched a new exclusive five-year fixed rate with a rate of 4.15%, The arrangement fee is £1,395, while valuation is free and assistance with basic legal work for remortgages is available. A fee-free version is available at 4.35%.
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