Meanwhile savings from two-year discounted variable rate deals continue to fall.
Your Move’s April Remortgage Index, that tracks first year savings achieved from switching from a £100,000 standard-variable rate (presently averaging 6.59%), to the Best Buy rate in different classes, reveals contrasting trends this month:
- First year savings achieved by switching to the Best Buy1 five year fixed rate are now £1290, up 6.6% from a month ago (23/03/05 - £1210), and up a staggering 5.4 times from 12 months ago (£240).
(Note average upfront fees have been subtracted from the above interest savings).
- By contrast, first year savings achieved by switching to the Best Buy two year fixed rate has remained the same over the last month at £1410. Over the last year these savings have risen by 86% (from £760).
- The savings achieved by switching to the Best Buy1 2 year discounted variable rate have fallen by 4%, from £1740 last month to £1670 presently. This follows a year long trend of falling benefits from switching to this type of mortgage (savings of over £1830 were achieved 12 months ago, see Table 2). 5 year discounted variable rate deals have been offering broadly the same first year benefits over the last 12 months.
Jon Round, Remortgage Analyst at Your Move comments: "Five year fixed rate deals are getting more and more attractive for people remortgaging relative to shorter term deals. Lenders have noticed that business has been slacker in recent weeks and the election certainly had an effect. Voting for a government always depresses activity in the housing market and 2005 is no different. What’s more, with signs of a cooling economy, the bond markets are less jumpy about interest rates than they have been and that has seen long term interest rates fall, bringing five-year mortgage rates down with them and making them look increasingly attractive relative to standard variable rates. Lenders are enticing borrowers with better offers in an attempt to increase business. Canny remortgagers can take advantage of this."
