According to research from Compare the Market, which used data from a Freedom of Information request to the Financial Conduct Authority (FCA) and data from the Bank of England, the average two-year fixed rate in 2023 was 5.06%, which is equal to monthly payments of £965 and annual repayments of £11,579.
Figures show that the current average two-year fixed rate is 4.6%, with the monthly repayments standing at £915 and annual repayments coming to £10,982.
This means borrowers refixing from a two-year fixed rate onto a new two-year fixed rate could save up to £597 per year.
The report added that the current standard variable rate (SVR) is 7.13%, equal to monthly payments of £1,203 and annual repayments of £14,440.
If borrowers coming off two-year fixed rates revert to the SVR, then their annual payments could grow by £2,861.
How to get your first-time buyer clients mortgage ready
Sponsored by Halifax Intermediaries
Borrowers could also make savings if they refix onto a five-year fixed rate, as the current average rate is 4.33%. This means monthly payments are £997 and the annual repayments are estimated at £10,639.
The above could save borrowers coming off a two-year fixed rate secured in 2023 £940 per year.
The report noted that if the Bank of England cuts the base rate this week, mortgage rates could continue to fall, as swap rates – which are based on interest rate expectations and are the basis for mortgage pricing – could fall.
Guy Anker, mortgage expert at Compare the Market, said: “If the Bank of England cuts interest rates, it will be good news for households on a variable rate mortgage or whose deal is ending soon, potentially lowering their biggest monthly expense.
“Our research shows average mortgage rates are lower than they were in 2023, so anyone coming off a two-year fixed-rate deal may find their monthly payment could fall if they shop around for a new deal.”
He added: “If your mortgage deal is set to end this year, it’s wise to consider your options now, as you can sometimes lock into a new deal up to six months before it is due to start. While there will be exceptions, it is often cheaper to get a new deal than move onto your lender’s standard variable rate (which most fixes and tracers revert to).
“Before looking around for a new deal, it’s essential that your credit score is up to scratch. A potential new lender will check how you’ve been handling debt and managing your finances over the past few years. This includes any credit card applications, missed payments or even late payments of utility bills. It’s worth checking your credit file before making a new mortgage application in case there are any errors or past credit issues you don’t know about. And in the meantime, keep up with all payments.”
