Brokers can seize the opportunity to review client portfolios and secure better deals
UK homeowners and landlords coming off two-year fixed mortgage deals are seeing improved affordability thanks to easing mortgage rates, according to new figures from mortgage broker Alexander Hall.
The analysis compares the cost of a typical mortgage taken out two years ago with today’s average rates. It shows that residential borrowers are now paying less each month on average when remortgaging, while buy-to-let investors are seeing even greater savings.
Two years ago, a typical residential borrower would have secured a two-year fixed rate at 5.26%. Based on an average property price of £260,941 and a 15% deposit, this equated to a loan of £221,800 with monthly repayments of £1,330.
Today, the average rate for the same product has fallen to 4.92%. With £9,045 paid off over the original two-year term, a remortgaged loan of £212,755 would now cost £1,289 per month — £41.47 less than before, translating to £995 saved over the next two years.
The drop in rates has been even more beneficial for landlords. Investors coming off two-year fixed buy-to-let deals previously faced average rates of 5.34%, with monthly repayments of £1,183. Those remortgaging now are seeing rates closer to 4.40%. For an average loan of £187,815, this brings repayments down to £1,083 — a reduction of £100.11 per month or just over £2,400 over two years.
The figures offer a sign of relief for mortgage holders, particularly in a market that has been shaped by sustained rate hikes over the past two years. For brokers, the data points to an opportunity to revisit client portfolios and assist borrowers in accessing better terms as rate conditions continue to improve.
According to research by mortgage network PRIMIS, remortgaging activity is expected to rise sharply this year, with 93% of borrowers anticipating higher remortgage volumes over the next year.
“The nation’s borrowers have had to traverse an increasingly difficult landscape in recent years, as the Bank of England base rate climbed consistently from the end of 2021 and remained at the peak of 5.25% until the summer of last year,” said Stephanie Daley (pictured), director of partnerships at Alexander Hall.
“This means that those taking out a mortgage two years ago would have done so as rates were climbing and while those opting for a fixed rate product may have avoided a peak in mortgage rates, they still would have been paying a considerable monthly repayment.
“The good news is that the mortgage market has since stabilised, first due to a hold on the base rate and then following the three cuts seen since August of last year. As a result, those now looking to remortgage are likely to see the cost of their monthly payments reduce, and this should equate to a sizable saving should they opt to lock in for another two year term.”
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