But those who still have some months left before they can remortgage need not worry about missing out, say experts, as a rate war is tipped to be around the corner.
Analysis by Moneyfacts found that the average fixed rate across all loan to value bands is 2.78 per cent, 0.35 per cent lower than five-year deals in 2016.
Families who are slow to remortgage to a new low rate could pay around £175 a month extra by ending up an the average standard variable rate of 4.40 per cent.
Those who choose to tie their mortgage interest rate in for another five years will save more than £10,000 compared to a family who rolls on to the standard variable rate (SVR) and remains there for 60 months.
But borrowers coming out of two-year fixed rate and shopping around for a replacement deal will be charged on average 0.06 per cent more compared to the average two rate available in 2019. If they roll onto the revert rate, however, they may face an increase of nearly two per cent which equates to more than £200 per month. Over a 24 month term they could pay out over £4,800 more in payments.
And as more lenders release sub-one per cent deals a borrower currently on the average SVR of 4.40 per cent who meets the criteria for the lowest fixed rate on the market, priced at 0.91 per cent, will make a saving of £350 a month. Over two years they would save approximately £8,500 by switching from their lender’s default rate.
Eleanor Williams, finance expert at Moneyfacts.co.uk, said: “Rumours amongst brokers abound that the mortgage rate war could just be hotting up.
“After an unprecedented 18-months in the mortgage sector, some positivity is beginning to become evident with month-on-month falls in average fixed rates and record-low fixed rate deals launched recently.”
Santander echoed the sentiment that rates could soon go even lower in its recent financial update. It said there were signs that mortgage activity was easing which would affect pricing on new mortgage lending, driving rates down.
