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17 Oct 2019

Remortgaging before Brexit: how to get the cheapest deal as the rate war hots up

Discover how mortgage rates have fallen since the EU referendum in 2016

Banks are slashing the cost of remortgaging, with one new market-leading deal losing its position at the top of the table within days of being launched.

As the clock ticks down to Brexit, lenders are competing to offer the best remortgaging deals - but how much has really changed since 2016's EU referendum?

Here, we explain what's happened to the mortgage market since the Brexit vote, and offer advice on whether now is the time to secure a cheap home loan.

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Mortgage rate war hots up ahead of Brexit

Many analysts have pointed to slowing property sales and stagnating house prices in the run-up to Brexit, but there is some good news for homeowners.

Remortgaging deals are becoming cheaper, with several banks cutting rates as the battle to top the charts intensifies.

Last week, TSB announced a new five-year fixed-rate remortgaging product at 60% loan-to-value (LTV), with a table-topping introductory rate of 1.49%.

Within days, Skipton Building Society cut its rate to 1.45% to leapfrog the TSB deal.

This competition comes hot on the heels of NatWest and Barclays releasing market-leading two-year fixed-rate deals at 60% and 85% LTV respectively in the last week.

What's happened to mortgage rates since Brexit?

It's been more than three-and-a-half years since the UK voted to leave the European Union. In that time, we've seen mortgage rates (and the Bank of England base rate) hit historic lows and begin to bounce back again.

The biggest change has been in the five-year fixed-rate market, where average rates have fallen by nearly half-a-percent since the spring of 2016.

A more modest reduction in two-year fixed-rates means that the gap in cost between a two and five-year deal is now just 0.3%, less than half the 0.65% recorded before the referendum.

This represents great news for borrowers looking to lock in their rate for a longer period.

Key dateAverage two-year fixAverage five-year fix
Brexit vote (June 2016)2.55%3.2%
Article 50 invoked (March 2017)2.32%2.91%
Original Brexit deadline (March 2019)2.48%2.89%
Current rates (October 2019)2.45%2.75%
Overall change-0.1%-0.45%

Source: Moneyfacts. 15 October 2019.

Cheapest remortgaging deals before Brexit

The best remortgaging rates have fallen at nearly all LTV levels since the referendum.

The exception to the rule is the two-year fix at 60% LTV. Before Brexit, HSBC was offering a record low rate of just 0.99%, but the cheapest rate is now 0.2% more expensive.

Borrowers remortgaging at higher LTV levels have enjoyed the biggest cuts, with the cheapest two-year rate at 90% LTV falling by 0.21% and the best five-year deal plummeting by 0.72%.

Upfront mortgage fees since Brexit

Falling rates are great news for homeowners looking to remortgage, but you'll need to watch out for high upfront fees.

When we crunched the numbers, we found that all the top 10 deals at popular LTV levels came with significant fees, some as high as £1,499.

And when we look more closely at fee changes since the 2016 referendum, we can see a distinct split between what's happened with fees on two and five-year deals.

Fees crash on two-year fixes

We mentioned earlier that two-year fixed-rate deals have seen smaller rate drops since 2016, but in that time providers have instead slashed their upfront fees.

The table below shows the average fee on a top-10 deal at each LTV.

As you can see, the overall average fee still tops £1,000, though it used to be more than £1,500 for some LTVs.

Loan-to-valueAverage fee (after 2016 referendum)Average fee in October 2019Change (£)

Five-year deals retain highest charges

Massive rate drops in the five-year market have resulted in some lenders looking to recoup profits by increasing their upfront fees.

At 60% LTV, the average fee has increased by £84, while 75% and 90% LTV have seen modest reductions when compared to shorter-term fixes.

Loan-to-valueAverage fee (after 2016 referendum)Average fee in October 2019Change (£)

Is now the time to remortgage?

If you're coming to the end of your fixed term, you're in a great position to negotiate a cheap deal, especially if you want to lock in your rate for longer.

If you've still got some time left on your fix, don't worry. It's unlikely that rates will skyrocket after the Brexit deadline, and the cost of early repayment fees on your current deal may outweigh the benefits of switching.

The good news is you can arrange a new deal up to six months before the end of your current term, so you can get a good rate locked in ahead of time.

How to compare mortgage deals

Speak to your current bank first

It's important to shop around to ensure you get the best deal, but don't sign anything until you've spoken to your current lender - even if the rates on its website aren't competitive.

Some banks offer favourable terms to existing customers when they conduct a 'product transfer', so it's well-worth giving your bank a call and hearing them out before moving your mortgage elsewhere.

Decide how long to fix for

Five-year fixes have become very popular, in part due to the current economic uncertainty, and in part due to the very cheap rates currently available.

They're not the right product for everyone, however. Five-year deals often come with high early repayment charges, which can run to to thousands of pounds.

With this in mind, consider your plans before locking yourself in. If you're unsure whether you might want to move home in a couple of years, choose a shorter term or obtain a mortgage you can 'port' to your new property without any fees.

Weigh up fees and cashback

High upfront fees can outweigh the benefits of a cheap upfront rate, so shop around to ensure you won't be asked to pay out thousands to secure your mortgage.

Many lenders are now offering cashback incentives, but be wary of these. The payments are usually only around £250 to £500, and they might be masking high charges elsewhere.

Consider using a mortgage broker

If you'd like some help finding the right mortgage deal, it can be a good idea to take advice from a whole of market mortgage broker.

A broker will be able to assess the current market and take your financial circumstances into account to find you the right deal.

For more tips on comparing mortgages, take a look at our guide on how to find the best mortgage deals.