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The latest borrowing statistics from the Bank of England reveal that remortgage approvals are on the up, rising from 48,900 in November 2018 to 50,400 in December, perhaps indicating that borrowers are seeking peace of mind amid increasing economic uncertainty.
Happily, lenders appear to be responding to this boost in demand by lowering rates: according to the latest analysis by Moneyfacts.co.uk, the average two-year fixed mortgage rate now stands at 2.49%, down from 2.53% in November last year and falling to the level last seen in October (when it also stood at 2.49%).
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Average two-year fixed rate
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Thanks to the increasingly competitive rates available, borrowers currently approaching the end of a fixed rate term – or those already sitting on their lender's standard variable rate (SVR) – have growing motivation to remortgage and lock in to one of these deals, particularly if they're seeking the best mortgage rates available. It's little wonder, then, that remortgaging activity appears to be on the rise, and with rates falling, there's every chance the pattern could continue.
However, it also means those who recently remortgaged may have missed out, as Rachel Springall, finance expert at Moneyfacts.co.uk, explains:
"Remortgage customers who locked into a two-year fixed deal at the end of 2018 may have missed out on a cheaper deal, as the average rate continues to decrease, dropping by 0.03% since January (2.52%) to stand at 2.49% today.
"Yet those who waited may now save even more by moving off their SVR and instead locking into a two-year rate. Indeed, based on a £200,000 mortgage over a 25-year term on a repayment basis, the average monthly repayment on the average two-year fixed rate of 2.49% would cost £896.23. When compared to the current average SVR of 4.89%, this would see borrowers save £260.17 per month*."
It's important to remember that these are just averages, too, which means it's possible to save even more. Currently, one of the best two-year fixed remortgage deals at 80% loan-to-value is from HSBC. Priced at just 1.64%, remortgagors could save £343.30 per month** compared to the average lender's SVR with monthly repayments of just £813.10, and it comes with a free valuation and free legal fees too (though remember to account for the £999 product fee).
"Not only this, but consumers searching for a competitively priced mortgage deal have an abundance of choice thanks to intense competition between lenders, including Barclays, Santander and TSB, which have all cut the rates on their two-year fixed deals over the past fortnight – and prominent lenders pushing down rates can signal others to follow suit," said Rachel.
This means now could be a great time to compare mortgage rates and find the best deal for your needs, whether you're looking to remortgage, move up the ladder or even buy that first home. Yet you may want to be quick about it, as Rachel concludes: "Borrowers must be aware that this current lending environment is unlikely to continue indefinitely and lenders could slow down this aggressive pricing if they see fit, meaning rates may rise.
"Therefore, any borrowers yet to refinance or who are adopting the 'wait and see' approach when deciding on whether or not to make a house purchase might want to consider doing so if they are anxious about ongoing uncertain economic factors."
*Based on a £200,000 mortgage over a 25-year term on a repayment mortgage basis. Monthly repayment on a rate of 2.49% would be £896.23, compared to £1,156.40 based on 4.89%. **HSBC monthly repayment on a rate of 1.64% would be £813.10.
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