Fixed mortgage rates fall for first time in two months

Despite expectations that the base rate increase from 0.5% to 0.75% on 2 August would mean mortgage rates would go up too (trackers and standard variable rates have), it seems that providers had already priced that in and some have now changed their fixed rates to the lowest we've seen in months. 

The best two-year fixed rate with a 60% loan-to-value (LTV) on a £200,000 property has decreased from 1.49% in August to 1.38% today, with a lower fee to boot, while the same trend applies to longer fixes.

The average two-year fixed mortgage rate too has dropped from 2.53% in September to 2.49% in October according to Moneyfacts data, showing the move goes beyond the best rates as lenders attempt to remain competitive.

However, according to those in the industry we spoke to, this isn't necessarily the start of a trend and waiting for rates to drop further could mean you lose out on top rates altogether.

See our  and  guides and Best Buys Tool to find the right deal for you.

How have the top rates changed?

At the end of August we showed there'd been little movement since the base rate increase, but today's cheapest fixed rates on a £200,000 property with 60% LTV compared with those immediately after the base rate are as follows:

• Two-year fix

  Today – 1.38% (Yorkshire Building Society, £1,700 fee)

  Pre-base rate rise – 1.49% (Chelsea Building Society, £1,900 fee)

• Five-year fix

  Today – 1.82% (Skipton Building Society, £2,001 fee)

  Pre-base rate rise – 1.87% (Yorkshire Building Society, £1,700 fee)

• Ten-year fixToday – 2.39% (TSB, £1,176 fee)

  Pre-base rate rise – 2.49% (Barclays, £1,034 fee)

You'll see the changes aren't huge, but when it comes to what is most likely your biggest monthly expenditure, any saving is a positive.

You should always take set-up fees into consideration, which will impact your overall costs whether you add them to your mortgage debt or can pay them upfront. On the top rates we've seen, these range from around £1,000 to £2,000.

If you've up to six months left on your mortgage, check if you can lock in a low rate now

The key message here is, if you're coming to the end of your current deal, don't wait to revert to your standard variable rate – which could see you overpaying £1,000s – but start shopping around NOW to bag yourself a low rate. Lenders traditionally let you secure a rate three to six months in advance – check with the individual lender.

If you're looking to remortgage, follow these steps (full info in our Remortgage Guide):

1. Check your current mortgage: rate, type (fix/variable), when the intro deal ends, the full term, early exit penalties & loan to value.

2. Benchmark a top new deal via our Mortgage Best-Buy Comparison.

3. See if you'll save on it with our Ultimate Mortgage Calculator.

4. Ask yourself: can I afford it, do I qualify, should I fix, etc? Mortgages are a maze, even if you've done it before, so a mortgage broker can help you decide what to do, plus they may have special deals you may not see direct. But you need a good credit record and lots of equity to bag yourself the top deals.

'Waiting for fixed rates to fall further could end up being a costly decision'

David Hollingworth from mortgage broker London & Country said: "The fall in the top two-year fixed rate may seem counterintuitive given the hike in base rate in August, but that increase had been well anticipated, so had already been priced into mortgage deals.

"In fact, many lenders have only sought to further enhance the rates on offer, underlining the fierce competition in the marketplace and the need for lenders to fight for business. 

"This time of year can often see a push from lenders, eager to get business on the books before the end of the year and to build pipeline for the new year.

"However, any change in market expectation of further rate rises can quickly change that and increases in funding costs could soon see any cuts reversed. Waiting for fixed rates to fall substantially could actually result in missing out and end up being a costly decision."