The average rate on deals with product fees dropped from 2.89% on 1 March 2020 to 2.30% on 19 June, and rates on deals without fees dropped from 2.80% to 2.28% in the same period, according to research by Moneyfacts.co.uk.
The average standard variable rate (SVR) went from 4.90% in March to 2.28% as of 19 June.
The average fee on deals subject to product fees has also dipped, albeit only marginally, from £1,040 on 1 March to an average of £1,018 on 1 June; by 19 June, however, this had risen again to £1,029.
On 1 March 2020, there were 1,780 deals with no product fee on the market, 2.157 deals with free or refunded legal fees, 3,145 deals with free or refunded valuations, and 1,377 deals with cashback.
Product numbers dropped to their lowest point bu 1 May, with 873 deals with no product fee, 1,218 with free or refunded legal fees, 1,630 with free or refunded valuations, and 737 with cashback.
These numbers lifted by 1 June, only to drop marginally again by 19 June.
Eleanor Williams, finance expert at Moneyfacts.co.uk, said: “Fixed rates have dropped to attractive lows over recent weeks.
“The latest Moneyfacts.co.uk data shows that the average rate charged on fixed rate products with no fee has reduced by 0.52% since March this year, and the equivalent average for deals with a fee has dropped by an even larger 0.59%, sitting at 2.28% and 2.30% respectively.
“The average [SVR] that customers may revert to at the end of a deal now sits at 4.48%, having decreased by 0.42% since the start of March.
“The potential savings for those looking at a new deal are clear, as those remaining on their SVR could be paying out as much as £182.58 more per month than those who have secured a new deal.
“Another consideration for those debating whether or not to look for a new mortgage deal is that the low initial rates we are currently seeing may potentially increase once lenders are able to return traditionally higher rated, higher [loan-to-value (LTV)] products to their ranges.
“However, caution is understandable at a time when many have been hit by a fall in their income levels due to furlough, redundancy or unemployment.
“Borrowers are likely to want to keep a close eye on their monthly outgoings and reduce costs where possible at the moment.
“Therefore, there may be mortgage borrowers who want to take advantage of this low rate environment to remortgage, but are hesitating due to concerns around taking on any additional expenses, such as paying a product fee or having to find the funds to meet other set-up costs such as legal fees or valuation expenses.
“It should then come as good news to consumers that despite the fact the average fee charged on a fixed rate product remains at a similar level to the start of March of this year, we are seeing stability in the proportion of fixed rate mortgage deals that carry no fee and growth in the proportion that offer an incentive package.
“Over this time period, there has been a 5% increase in the proportion of deals that offer free or refunded legal fees, a 7% rise in the percentage of the market where a free of refunded valuation is on offer, and a 2% increase in the proportion of the market where cashback is available.
“These changes suggest that despite operational difficulties and economic uncertainty, lenders are not just competing on rate, but are also tailoring their overall packages to entice borrowers too.
“While the increase in proportion of products that carry an incentive package is inherently positive and can alleviate some of the upfront cost associated with a new deal, borrowers do need to be aware that these incentives are likely to only cover the basics.
“Typically, free valuations tend to be basic and it is possible to instruct a surveyor to ensure a more comprehensive survey is completed.
“Free legal fees will generally cover just the standard conveyancing but, for anything more complicated, there would usually be further charges or the option to appoint your own solicitor.
“Deciding on the right mortgage deal comes down to more than just the initial rate available.
“Seeking independent financial advice would be wise to ensure the overall cost can be considered and to ensure the best option for individual circumstances is pursued.”