December has seen the average fixed mortgage rates at their lowest than seen in the past 12 months, Moneyfacts data has shown.
From December 2018 to December 2019 the average rate for a 2-year fix has dropped from 2.51% to 2.44%, whilst the average rate for a 5-year fix has fallen from 2.92% to 2.74%.
The average rate for a 10-year fix has decreased from 3.08% in December 2018 to 2.77% in December 2019.
Rachel Springall, finance expert at Moneyfacts, said: “There was a clear mortgage rate war at play throughout 2019, with the most notable drop in rates seen across the past six months.
“Whether this battle can continue at such a pace entering 2020 is unknown though, as lenders have already highlighted a squeeze on their profit margins as a result of pricing loans low.
“Santander, as an example, noted ‘a fall in income due to the highly competitive UK mortgage market’.
“Average fixed mortgage rates are at their lowest right now than seen across the past 12 months – indeed the average 2, 5 and 10-year fixed average rates have not sat lower in 2019 month-on-month than they do now.
“The most notable drop over the past year has been seen in the decade-long fixed mortgage market, with the average rate down by 0.31%, now standing at 2.77%.
“Borrowers may well be searching for a longer-term fixed rate mortgage during a period of economic uncertainty, so the rate cuts will be welcomed.
“A 5-year or 10-year fixed mortgage can provide a bit of certainty with mortgage repayments at the very least, even if the outlook for 2020 and beyond is uncertain.”
Springall added: “We even had the first 15-year fixed mortgage launched in 10 years in 2019, showing clear signs that lenders are tailoring their ranges to accommodate borrowers looking for a bit of security.
“The motivation to remortgage remains high due to the combination of little change in the average standard variable rate (SVR) this year and fixed rates falling.
“The average 2-year fixed rate mortgage stands at 2.44%, but the average SVR is an unforgiving 4.90%.
“The amount saved on repayments between the average SVR and 2-year fixed average rate is over £3,000 within the first year – which is based on a £200,000 mortgage over a 25-year term on a repayment basis.
“The rate war may well have improved the market in 2019 but it is still important that borrowers work out the overall true cost of any deal and not be swayed by the initial rate alone.
“The choice of deals that borrowers have before them may seem daunting, so seeking independent financial advice could help them navigate the mortgage maze.”