It's possible that a mortgage rate battle is brewing.

It's possible that mortgage demand is brewing.

Mortgage rates have fallen in recent months, and lenders are now offering a variety of sub-1% loans, so qualified customers should carefully consider refinancing.

The difference between the lowest immediately available two-year fix, which is currently at 0.91 percent, and the average standard variable rate (SVR), which is currently at 4.40 percent, is 3.49 percent, according to a recent analysis released by the data business.

This corresponds to a monthly savings of £350 for a £200,000 outstanding mortgage balance over a 25-year period.

At 0.99 percent, the cheapest immediately available five-year fix is 3.41 percent cheaper than the average SVR.

And, according to the business, “rumours abound that the mortgage rate war may be heating up.”

A borrower who took out a five-year agreement in July 2016 received an average rate of 3.13 percent, according to the Moneyfacts report, despite not having enough equity to qualify a sub-1 percent deal. The average five-year fix slipped to 2.78 percent in July.

Borrowers on a two-year fix, on the other hand, will not benefit from lower rates.

In July 2019, the average two-year fix was 2.49 percent, compared to 2.55 percent in July 2021. The research shows that this is still 1.85 percent below the average SVR rate.

“After an unprecedented 18-months in the mortgage business, some positive is beginning to emerge with month-on-month declines in average fixed rates and record-low fixed rate offers released recently,” says finance analyst Eleanor Williams.

Despite the two-year fix having climbed by an average of 6 basis points since July 2019, she claims that switching to the SVR with the aforementioned £200,000 mortgage debt will result in a £204 increase in monthly payments.

“It would be wise for borrowers to confirm what options may be available to them for a new mortgage, even if perhaps their existing lender is unable to offer a new deal, as eligibility criteria and requirements vary from lender to lender,” she concludes.

Drop a mail to andy@harveybowes.com to get a quote for your home loan or check out the facebook pages of UK Smart Property, and Andy Coghlan Harvey Bowes.

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