"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."
The average of the lowest fixed rate mortgages has now dropped back by more than 0.50% since the beginning of November, as market expectation for rates has eased since the spike caused by the mini-budget, analysis from L&C Mortgages shows.
L&C’s remortgage tracker revealed that the average of the low-LTV remortgage rates from the top ten lenders has fallen. The average two and five-year rates hit 5.90% and 5.67% respectively at the beginning of November but have already dropped to 5.38% and 5.07%.
A borrower taking a typical £150,000 repayment mortgage over 25 years at the average five-year rate could benefit from monthly payments £53 lower than at the beginning of the month. That would add up to a saving of more than £3,200 over the five-year period.
Although fixed rates are reducing, 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 five-year fixed rate could cut the annual outgoing by more than £1,330 and that saving could increase further if the Bank of England continues to raise rates.
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.
"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.”
