Mortgage rates have tumbled in recent months and with lenders issuing various sub-1% loans, eligible borrowers should be seriously considering a new mortgage, says Moneyfacts.

A new report issued by the data firm shows the difference between the lowest directly available two-year fix, which is currently at 0.91% and the average standard variable rate (SVR), at 4.40%, is 3.49%.

For an outstanding mortgage balance of £200,000 over a 25-year term, this equates to a saving of £350 a month.

And the cheapest directly available five-year fix, at 0.99%, is 3.41% off the average SVR.

For borrowers who don’t have the equity to secure a sub-1% deal, the Moneyfacts report shows that a borrower who took out a five-year deal in July 2016 secured an average rate of 3.13%. This July, the average five-year fix fell to 2.78%.

However, borrowers on a two-year fix will not enjoy cheaper prices. The average two-year fix in July 2019 was 2.49% compared to 2.55% in July 2021. This is, however, still 1.85% off the average SVR rate, the report shows.

Moneyfacts finance expert Eleanor Williams says: “After an unprecedented 18-months in the mortgage sector, some positivity is beginning to become evident with month-on-month falls in average fixed rates and record-low fixed rate deals launched recently.”

She adds that despite the two-year fix having risen by an average of 6 basis points since July 2019, dropping onto the SVR with the aforementioned ‘typical’ mortgage balance of £200,000 would see a £204 rise in monthly payments.

“It would be wise for borrowers to confirm what options may be available to them for a new mortgage, even if perhaps their existing lender is unable to offer a new deal, as eligibility criteria and requirements vary from lender to lender,” she concludes.