Remortgaging could save homeowners hundreds

Interest rates on mortgages have fallen by considerably more than the Bank of England's 0.5% base rate cut over the last year, meaning homeowners could save hundreds of pounds by shopping around for a cheaper deal.

Financial data analysts Moneyfacts said in a report today that in the year to July there has been a fall in the best-buy mortgage interest rates of between 0.85% and 1.35%, depending on the type of loan. In the same period the base rate has fallen from 4% to 3.5%.

Fixed rate mortgages, with no tie-in, showed the greatest fall in the cost of repayments over the last year. According to Moneyfacts' data, the lowest interest rate for these products is now 3.24% compared to 4.59% in July last year.

For someone with a ?100,000 repayment mortgage taken over 25 years, switching to the lower rate would see their monthly repayments fall from ?560.95 to ?486.79; a saving of nearly ?900 in a year.

First-time buyer mortgages have also fallen by an average 1.06%, while the best-buy discounted variable rate mortgages have seen a reduction in interest of 0.85%.