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Fixed rates hit all-time low last year

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Now could be the time to switch as lower fixed rates and static variable deals make remortgaging an appealing option.

Fixed-rate mortgages fell further in 2015, reaching their lowest ever levels, according to Halifax.

At the same time standard variable rates remained static, meaning the potential savings for borrowers switching to a fix has improved significantly over the course of the past two years.

The lender said the average fixed rate now stands at 2.66% compared with the average standard variable rate of 4.49%, with the gap between the two widening by 1.81 percentage points since August 2012.

Big savings

This means the potential savings for homeowners switching to a fixed rate deal has increased by 50% over the last two years.

In November 2013, the average monthly payment of a homeowner who took out a two-year fixed rate on a £100,000 mortgage would have been £485. At the same time, the payment on a standard variable rate mortgage would have been £551 – a monthly saving of £66.

A borrower taking out a fixed rate in November 2015 would be paying £457 a month on a £100,000 loan compared with £555 on the average standard variable rate – a saving of £99 a month; 50% higher than two years earlier.

Craig McKinlay, mortgages director at Halifax, said: “With base rate remaining at record low levels for another year, fixed-rate mortgages fell further in 2015. Over the past three years average rates have fallen sharply, significantly widening the gap between them and standard variable rates. As a result, borrowers have been able to make considerable savings.”