The motivation for existing borrowers to remortgage from a lender’s standard variable rate (SVR) has fallen for the first time since March, Moneyfacts has found.
The difference between the average 2-year fixed rate of two years ago (2.33%) and the current average SVR (4.89%) fell from 2.70% in October to 2.56% this month.
Darren Cook, finance expert at Moneyfacts, said: “Just over two years ago, the mortgage market reached the end of a period of aggressive competition, which saw the average 2-year fixed mortgage rate fall to its historical low of 2.20% in October 2017.
“Borrowers who took advantage of this increased competition between lenders before the base rate rise in November 2017 may have seen a difference of 2.70% between their previous fixed rate and last month’s average SVR (4.90%).
“However, borrowers who missed out on historical low mortgage rates by securing a mortgage during November 2017 may have had to pay higher monthly repayment instalments for the following two years, and on average will see their interest rates rise by 2.56% when reverting to the current average SVR of 4.89%.
“A high motivation to switch deals is clearly driving some to switch providers, which could see some lenders lose a substantial proportion of their mortgage book from remortgagers looking elsewhere.
“However the competition between providers to push average interest rates down from 2.53% in November 2018 to 2.45% today seems to not only be motivated by lenders trying to attract new business, but also preventing their existing mortgage customers from drifting away to pastures new.”