If you’re visiting the end of your fixed-rate mortgage later this year, you may be wondering just how much you could lay aside by switching to a new deal.
Here, we explain how the mortgage market is different over the last 5 years, and offer suggestions about getting the best rate when remortgaging.
The fixed-rate mortgage market in 2022
Right now, home loan rates are extremely attractive, with two-year fixed-rate deals averaging 2.47%, and five-year deals at 2.85%.
Although these figures are very well more than the record lows observed in the Autumn of 2022, rates remain very competitive, especially compared to the averages in 2022.
One of the key trends from the last five years has the closing from the gap on price between two and five-year fixes. Five years ago, the space was 0.67%, however it’s just 0.38%.
Remortgaging from the two-year fix in 2022
People have a tendency to talk about the past through rose-tinted spectacles, but 2022 was a halcyon year to take out a home loan, as rates hit historic lows ahead of two increases staying with you of England base rate.
If you had been fortunate enough to remove a two-year fix once the sun was shining, you’ll be because of remortgage later this season.
As the chart below shows, average rates on another two-year fix remain about 0.2% more expensive compared to what they were in 2022.
| Month | Average two-year rate in 2022 | Average two-year rate in 2022 |
| January | 2.31% | 2.52% |
| February | 2.33% | 2.49% |
| March | 2.33% | 2.49% |
| April | 2.32% | 2.48% |
| May | 2.3% | 2.47% |
Can I remortgage to a lower rate?
While average rates provide a useful help guide to the present market, they’re not necessarily reflective of the deal you may be offered – especially when you are looking at remortgaging.
For example, after two years of coughing up off your mortgage (and maybe even making over-payments), your outstanding borrowing will be reduced.
In addition, the value of your property might have increased, which could permit you to remortgage at a lower loan-to-value (LTV) level – decreasing your monthly repayments along the way.
The table below shows the lowest rates now available for each loan-to-value category.
| Max loan-to-value | Lender | Initial rate | Revert rate | APRC | Fees |
| 60% | Furness | 1.39% | 5.79% | 5.2% | lb1,250 |
| 75% | Lloyds | 1.51% | 4.24% | 3.8% | lb1,499 |
| 80% | HSBC | 1.64% | 4.19% | 3.8% | lb999 |
| 90% | Lloyds | 1.79% | 4.24% | 3.9% | lb1,499 |
Remortgaging from a five-year fix in 2022
If, however, you kept in your mortgage rate for 5 years back in 2022, you’ve probably been counting the days before you could change to a better deal, with rates now reduced than whenever you got your original home loan.
It’s been a great Twelve months to get a five-year fix, with increased competition among lenders leading to good rates for borrowers looking to protect your loan payments for extended.
Many five-year fixes include high early repayment charges, so such long-term deals are perfect for homeowners who aren’t planning on moving in the foreseeable future and wish security among wider economic uncertainty.
As the table below shows, the average five-year fix has dropped on price by more than a percent this year, when compared to five years ago.
| Month | Average five-year rate in 2022 | Average five-year rate in 2022 |
| January | 3.94% | 2.94% |
| February | 3.99% | 2.9% |
| March | 4.04% | 2.89% |
| April | 4.05% | 2.88% |
| May | 4.12% | 2.85% |
Cheapest five-year fixed-rate mortgages
As we said earlier, average rates only tell 1 / 2 of the storyline. If you’re in a position to remortgage at a lower LTV, you could access some good rates of 2% or below on another five-year deal.
| Max loan-to-value | Lender | Initial rate | Revert rate | APRC | Fees |
| 60% | Skipton | 1.78% | 4.99% | 3.9% | lb1,995 |
| 75% | Yorkshire Building Society | 1.87% | 4.99% | 3.8% | lb1,495 |
| 80% | Yorkshire Building Society | 2% | 4.99% | 3.9% | lb1,495 |
| 90% | Yorkshire Building Society | 2.21% | 4.99% | 4% | lb1,495 |
How much does your rate affect what you’ll pay?
We’ve done the idea, so let’s consider the practical aspect of mortgage rates – what you’ll actually pay every month.
And in reality, 0.1% here or there doesn’t possess a significant effect in your repayments.
Using data from Moneyfacts, we’ve crunched the numbers to provide an extensive estimate of how your rate affects your loan payment.
To do that, we’ve taken some of the best deals now available, with different remortgage of lb200,000 at 75% LTV.
Two-year fixed-rate deals
| Initial rate | Estimated monthly payment during fixed period |
| 1.5% | lb800 |
| 1.7% | lb820 |
| 1.9% | lb840 |
| 2.1% | lb860 |
Five-year fixed-rate deals
| Initial rate | Estimated monthly payment during fixed period |
| 1.9% | lb840 |
| 2.1% | lb860 |
| 2.3% | lb880 |
| 2.5% | lb900 |
When in the event you consider remortgaging?
If you’re visiting the end of your fixed term between now and also the end of 2022, it’s much less early to look around for any better deal.
Generally speaking, your mortgage company will email you a few months prior to the end of your current fix to warn you that you'll soon be moved on to the standard variable rate (SVR), which will more often than not be greater than the speed you’re paying during your fixed term.
Your current provider may offer a remortgaging deal (usually called a product transfer) or invite you to call and discuss your options.
It’s possible to agree a new mortgage as early as six months before the end of your fixed term, and remortgaging may take so long as 8 weeks.
With this in mind, the sooner you receive your finances in order and begin shopping around, the greater.
The price of remortgaging
Early repayment charges
As you might have gathered, we think it’s very important to arrange a new deal prior to being managed to move on to your lender’s SVR – but there are some things you’ll have to consider first.
As we mentioned earlier, some mortgages come with early repayment charges (sometimes noted as ERCs or referred to as ‘exit fees’). On a five-year fix, these will often operate on a sliding scale starting as high as 5% – so 5% in year one, 4% in year two, 3% in year three etc.
This won’t affect your ability to remortgage at the end of your fixed term, however it entails when you’ve still got a couple of years to go, you might be best waiting it.
Arrangement fees
When selecting a new deal, you’ll may need to look a little beyond only the initial rate. While market-leading deals are extremely attractively priced, some come with high arrangement fees (sometimes called product fees), which could rise above lb1,000.
it’s possible to add this fee to your mortgage, but you’ll then have to pay interest on it – therefore if possible, you should consider paying it up-front.
