Average interest rates for two-year and five-year fixed-rate mortgages are at a record low. If you're looking to remortgage now is the time to take advantage of these low mortgage interest rates.
Related: Knock thousands off your mortgage by simply shopping online with this new service
According to financial information group, Moneyfacts mortgage interest rates are at their lowest since 2007, dropping below last months record low of 2.66 per cent. This months rates had fallen to an average of 2.09 per cent for a two-year deal and 2.35 per cent for a five-year one.
The interest rates are dropping because of the two emergency cuts The Bank of England have made to the base rate. This base rate is the bank's set interest rate for lending to other banks.
The record low base rate of 0.1 per cent has had a knock-on effect on lenders and borrows. Swap rates, upon which fixed-rate mortgage deals are based have dropped, and the lenders have used these savings to make mortgage deals cheaper.
This record-breaking fall in fixed-rate deals has made it a perfect time to remortgage. If your current mortgage deal has come to an end and you are sitting on a lender's standard variable rate (typically 4.5 per cent) you could save upwards of £3,135 a year by switching to a two-year fixed rate deal now. This is based on a £200,000 mortgage.
It is also the perfect opportunity to consider opting for a longer fixed-rate deal. Currently, there is only a small gap between the cost of a two-year and a five-year fixed-rate deal. This means homeowners will pay a lower premium to secure the rate for five years.
While this is great news for those looking to remortgage, getting a mortgage in the first place has become much harder.
Due to the impact of the pandemic on the UK's economy, many lenders have reduced the number of products they have on offer. The number of different mortgages has more than halved from 5,222 products in March, to 2,566.
While the number of mortgages for homeowners with only a 5 per cent deposit had dropped from 279 to just 22. For those looking to borrow 90 per cent of their property's value, the number of mortgages has dropped from 563 to 50.
Related: Martin Lewis reveals his top tips for getting a mortgage as a first-time buyer
If your current deal is coming to an end soon, shop around and see if you could remortgage and bag yourself a deal.
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