26 Aug 2020
Homeowners urged to take advantage of low interest rates
Mortgage borrowers not locking into today’s low fixed-rate deals could be losing out on big savings.
Back in July, the typical rate on a fixed deal was at a historic
low - with the average rates on mortgages with a fee standing at 2.29% and
those without a fee at 2.28%.
Since then, costs have been on the up again - and now typically stand at 2.54% on deals with a fee and 2.61% on deals without a fee.
There is no guarantee that rates will not increase further some borrowers should consider exploring their options now.
Compared to the average standard variable rate - which is 4.44% currently - borrowers who switch from a revert rate to a new fixed deal now could potentially save in the region of £150 per month on their mortgage payments.
Factors
Although the rate is important when choosing a mortgage, the true cost of the deal will take into account a range of factors.
Reasearchers at Moneyfacts have looked at how fixed-rate mortgage product fees and incentives have changed over the last six months, at a time when the number of such deals on offer fell by more than half to less than 4,000.
It found that the average product fee on fixed deals (excluding those with no fee) increased from £1,040 in March to £1,066 on August 24. The most significant rise was between June and August, when it jumped by £48, from a low of £1,018.
The percentage of deals without a product fee has remained stable at 40%. This is despite the overall number of mortgages without a fee plunging from 1,780 in March to 806 in August, as lenders withdrew deals right across the market during the last six months.
Moneyfacts says borrowers looking for a cashback offer will be disappointed that the percentage of deals offering cashback as an incentive has slipped from 31% in March to 27% in August, with the number of products offering cashback down from 1,377 to 543 during this period.
But it wasn't all bad news for borrowers, as the percentage of deals offering no or refunded legal fees increased from 49% in March to 57% in August.
Meanwhile, the number of deals with free or refunded valuations has remained stable at 71%.
Scotland's mortgage experts
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