The amount being saved every month by borrowers because fixed rate mortgages have fallen to their lowest level is growing, according to research.
However, borrowers with a standard variable rate mortgage have seen their rates remain static.
The figures come from the Halifax who say that the average interest rate for new fixed-rate mortgages has fallen by 0.59% over the past year while standard variable rate mortgages remained the same.
For those looking for a mortgage, the average fixed rate is now standing at 2.66% while the average standard variable rate is currently at 4.49%.
This is now the largest gap between the two rates since August 2012 and means that homeowners who switch to fixed-rate deals have seen their savings grow by 50% over the past two years.
Homeowners who took out a two-year £100,000 fixed-rate mortgage
The Halifax says that homeowners who took out a two-year £100,000 fixed-rate mortgage in November 2013 would have been paying £485 a month.
Those who took out a standard variable rate for the same amount would have seen their repayments being £551 – which is £66 a month dearer.
Now research reveals that borrowers who signed up for a fixed rate deal in November 2015 would be paying a mortgage of £457 a month for a £100,000 loan.
Those on a standard variable rate mortgage would be paying £555 which is £99 a month more and 50% higher than the difference being saved two years ago.
Halifax’s mortgage director, Craig MacKinlay, said: “With base rates remaining at record low levels, fixed-rate mortgages have fallen further in 2015.
“In the last three years, average rates fell sharply which significantly widens the gap between them and standard variable rates giving borrowers considerable savings.”
Remortgaging activity has picked up
He added that remortgaging activity has picked up over the past 12 months – though it still below the peak registered in 2008 – and this has declined recently as borrowers have been lulled into believing that interest rates will not rise.
He said: “Some borrowers could be missing out on making significant savings.”
Bridging finance loans rocket by 14%
Meanwhile, the value of bridging loans being made in the UK rocketed by 40% last year, according to the Association of Short Term Lenders (ASTL).
Bridging loans amounted to £2.59 billion in 2015.
In addition, ASTL says that completions are growing at twice the speed of mainstream mortgages though the pace of growth is now slowing.
Bridging finance continues to outstrip the mortgage market
Benson Hersch, the chief executive of ASTL, said: “Bridging finance is outstripping the mortgage market as borrowers and brokers turned to bridging loans.”
He added that the association’s members are enjoying growing business volumes and the bridging finance industry is becoming a crucial part of the UK’s mortgage lending market.
He added: “Sentiment remains positive and the final figures for last year will show a strong demand for bridging loans.”
Article contribution by John at Mortgage Broker Aberdeen