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Today's Moneyfacts mortgage average has revealed that the two-year fixed rate has fallen below 2.50% for the first time since April, defying expectations following August's rate rise. This means that those borrowers who have yet to remortgage still have a chance to get a low rate deal.
"Despite the Bank of England increasing the base rate to 0.75% and markets adjusting in August, the average rate for two-year fixed rate mortgages now stands at 2.49% – the first time it has fallen below 2.50% since April this year, when the average two-year fixed rate stood at 2.43%," Charlotte Nelson, finance expert at Moneyfacts.co.uk, commented.
As a result, "the motivation for borrowers to remortgage away from their standard variable rate is increasing," Charlotte continued. "So, providers will need to remain competitive or face the prospect of losing a sizeable chunk of their mortgage book."
Coupled with the increased competition among mortgage providers as the end of the year approaches, it's no surprise that lenders are still defying the recent base rate increase. While some lenders are clearly choosing to reduce their rates to keep borrowers interested, causing the average to drop, other providers might be improving their incentives or decreasing fees to attract customers.
"With the current level of economic uncertainty in the market, it is difficult to tell how long these low rates will continue, therefore any borrower considering a fixed rate option should act fast to avoid disappointment," Charlotte concluded. To find the latest mortgage Best Buys, simply click through to the fixed mortgage charts or fill in your own mortgage search.
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