Average mortgage rates have plummeted since their peak in November following the aftermath of the disastrous mini Budget.

According to fee-free mortgage adviser, L&C Mortgages, a price war has taken hold, which means the average rate for a two-year fixed deal stands at 4.67%, down from 5.9%.

Meanwhile, the average five-year fixed rate has dropped from 5.67% in November to 4.32% currently.

L&C Mortgages said that rates have fallen to such a degree that borrowers could now benefit from payments over £100 a month lower for a typical £150,000 repayment mortgage over 25 years.

Figures show that monthly payments for the average two-year fixed rate have decreased from £957.30 in November to £848.29 now. The five-year fixed rate monthly payments currently stand at £818.50, which is a fall from £936.42 in November.

L&C Mortgages said for “those seeking the security of a fixed rate now, they would pay £1,308 less per annum for today’s two-year fixed rates and £1,415 less for five-year rates compared to only a few months ago”.

Standard Variable Rates climb to nearly 7%

L&C Mortgages said that the Standard Variable Rate (SVR) has climbed, with the average for the top ten lenders standing at 6.73%. This is up from 5.6% in November.

The broker said that monthly payments in November stood at £932.81, whereas now monthly payments come to £1,034.47.

It added that this would cost homeowners almost £2,600 more per year than the average five-year fixed rate at 4.32%.

The firm added that with another base rate increase due this week, the average SVR would likely continue to increase.

L&C Mortgages offers a free rate check service to see if borrowers could benefit from a lower rate and has announced an exclusive five-year fixed rate at 4.15%.

It has an arrangement fee of £1,395, free valuation and help for basic legal work for remortgages. There is a fee-free version priced at 4.35%.

The rollercoaster ride continues

David Hollingworth, associate director at L&C Mortgages, said: “The rollercoaster ride for mortgage borrowers continues and many may have lost track of how much fixed rates have improved since the pandemonium following the mini Budget.

“Funding conditions have improved and as lenders compete harder for mortgage business, a price war has broken out, sending fixed rate costs plummeting. As a result, the cost of the current best in class fixed deals is potentially thousands per annum lower than just a few months ago.”

He said that while pricing had improved it was “higher than the lows of recent years” and those on fixed rate deals that were expiring would need to “plan ahead”.

Hollingworth said that he expected rate cuts would continue even if there was another base rate increase this week.

He added that those on an SVR should “urgently review their options” as they were often 7% or more, and a penalty free tracker could offer a “better holding position”.

“Many borrowers will prefer the security of a fixed rate so they at least know where they stand with their biggest outgoing. The fixed rate improvements mean that rates are now at the lowest level since the mini Budget sent them into orbit,” he said.