Data from Moneyfacts shows that the difference between a two-year fixed rate mortgage taken out two years ago and today’s standard variable rate is at its highest since March 2008.
The firm reports that the average SVR increased from 4.72 per cent in August to 4.85 per cent so far in September. With the average two-year fix from two years ago being 2.44 per cent, the difference between the two now stands at 2.41 per cent.
In March 2008, this difference stood at 2.47 per cent.
This ten-year high in difference, Moneyfacts says, will power further remortgage activity, which is already dominating the mortgage market, according to UK Finance.
Moneyfacts finance expert Charlotte Nelson says: “This [data] shows the significant impact the 0.25 per cent jump in base rate has had on the mortgage market just one month on from the rate rise. A year ago, when the variance stood at 1.88 per cent, borrowers reaching the end of their fixed deal would perhaps not have reacted as quickly as they may do today when approaching an SVR.
“It is likely that many savvy borrowers pre-empted the base rate rise and have already remortgaged to another fixed deal, which in turn has boosted remortgage activity… the extra motivation is only going to boost this remortgage trend further.
“The increased benefit to be gained by switching deals mean providers will need to remain competitive or face losing a substantial chunk of their mortgage book. However, as it is becoming increasingly difficult for lenders to lower rates, they may look at other aspects of the mortgage package to attract remortgaging customers, such as fees and incentives.”