The average two-year fixed rate mortgage now stands at 2.49%, down from 2.53% in November last year, said Moneyfacts, as increasingly competitive rates become available.

The financial information provider said the current rate war follows a surge in remortgaging, with approvals up from 48,900 in November to 50,400 December 2018 (Bank of England).

Borrowers are looking for payment security amid continuing economic uncertainty, and lenders are responding with tempting deals.

Rachel Springall, finance expert at Moneyfacts.co.uk, said: “Remortgage customers who locked into a two-year fixed deal at the end of 2018 may have missed out on a cheaper deal, as the average rate continues to decrease, dropping by 0.03% since January (2.52%) to stand at 2.49% today.

“Yet those who waited may now save even more by moving off their SVR and instead locking into a two-year fixed deal.”

How much could you save?

According to calculations from Moneyfacts, the average monthly repayment on the average two-year fixed rate of 2.49% would cost £896.23. When compared to the current average SVR of 4.89%, this would see borrowers save £260.17 per month by switching, based on a £200,000 mortgage over a 25-year term on a repayment mortgage basis.

It found that one of the best two-year fixed remortgage packages at 80% loan-to-value is currently from HSBC, you can check out their site for rates. Priced at 1.64%, it comes with a free valuation, free legal fees, and carries a £999 product fee. Remortgagors locking in at HSBC’s rate of 1.64% could save £343.30 per month compared to the average lender’s SVR.

Springall added: “Not only this, but consumers searching for a competitively priced mortgage deal have an abundance of choice thanks to intense competition between lenders, including Barclays, Santander and TSB, which have all cut the rates on their two-year fixed deals over the past fortnight – and prominent lenders pushing down rates can signal others to follow suit.”

But she warned: “Borrowers must be aware that this current lending environment is unlikely to continue indefinitely and lenders could slow down this aggressive pricing if they see fit, meaning rates may rise as they did between March and November last year, when they increased by 0.14%.”