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Fixed mortgage rates at historic low – but remortgage activity remains static

Wednesday 26th February 2014

Fixed rate mortgages are at their lowest rates in recent years. However, the number of homeowners remortgaging onto these products remains low, Halifax has revealed.
Although fixed rates offer homeowners the stability of a guaranteed rate for a set term, making it easier to plan mortgage costs into a monthly budget, analysis by the bank has found that a consistent number of homeowners are choosing to remain on Standard Variable Rate mortgages. 
Since September 2012 fixed rates have fallen for 16 consecutive months, during which time they have been below Standard Variable Rate (SVR) mortgages by 83 basis points (Fixed Rates 3.52%; SVR 4.36%).
In September 2012 the average monthly payment of a homeowner who took out a 2-year fixed rate would have been £534; at the same time the payment on an SVR mortgage would have been £544. Compared to the average fixed rate deal in December 2013, with a monthly payment of £476, those who had chosen to fix would now be saving £75 a month compared to those on the average variable rate (£551).
Craig McKinlay, Mortgages Director at Halifax, commented: “As Standard Variable Rates remain at historically low levels, which may have reduced current borrowers' incentive to move onto a fixed rate, you would still expect to see remortgaging activity respond more significantly to the reduction in fixed rates also.
“With recent reassurances from the Bank of England that interest rates are unlikely to increase in the very near future,  borrowers now appear more willing to bide their time on a standard variable rate until there are stronger signs of base rate changing although it is important to remember that this is not the only factor that influences mortgage rates.”

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