A home owner with £300,000 of debt can reduce monthly payments by nearly £700 - a £15,000 net annual saving, our figures show.
It is now the most rewarding time to remortgage for six years, independent analysis of the home loan market has found. A series of drastic rate cuts by lenders has increased the incentive to take a fixed deal to levels unseen since Northern Rock collapsed in August 2007 and Britain was sucked into financial crisis.
And, crucially, an analysis of banks' loan books by financial researchers at Standard & Poor's suggests that more than half of borrowers could save money by switching to a cheaper mortgage deal.
Brokers said the figures reflected the Government's attempts to prop up Britain's sluggish property market.
In particular, the Funding for Lending Scheme, which a year ago gave banks' lending arms access to £80bn of cheap money, has driven down fixed rates to attractive levels.
Analysis for The Daily Telegraph shows that borrowers currently on their lender's standard variable rate (SVR) the "revert to" rate that applies when any fixed or discounted deal ends stand to save tens of thousands of pounds over the next two years by remortgaging.
For example, a home owner with £300,000 of debt can reduce monthly payments by nearly £700 by ditching a high SVR for the best two-year fix. Even after paying arrangement, valuation and legal costs, the total saving over two years is £14,300, according to mortgage broker London & Country.
Ray Boulger of John Charcol, another broker, said: "The biggest winners will still be those who own a decent portion of equity in their home perhaps 30pc or 40pc but the majority of mortgage borrowers can make real savings. The only surprising thing is how long it has taken for the Government's stimulus to feed through and for remortgaging to kick off again."
The numbers of people taking out new loans fell heavily when banks were hit by the credit squeeze in 2008. Before that, it had been normal for borrowers to remortgage every few years, typically when a fixed rate ended.
The alternative was moving to a lender's SVR, which was almost guaranteed to be more expensive. For example, the research by Standard & Poor's (S & P) found that between 2005 and 2007 the average SVR was 1.5 percentage points higher than the best two-year fix.
However, this incentive was rapidly stripped away when the financial crisis struck and the Bank of England started cutting interest rates.
Lenders slashed their SVRs in line, with some even turning negative. Many lenders, such as Nationwide Building Society, had no option but to trim to unthinkably low levels, having promised to track Bank Rate in their terms and conditions. This left the best two-year fixed rate just half a percentage point below the average SVR less than the minimum threshold at which remortgaging becomes cost-effective, according to S & P. However, the gap has finally returned to a "normal" pre-crisis level of 1.5 percentage points, thanks to a rush of cheap new loans flooding the market.
Incentive to remortgage: The average new fixed mortgage deal was worse than the average SVR in 2009 but now the financial gains from remortgaging are back to 2007 levels
The revival began in the summer of last year just as the Government launched Funding for Lending.
David Hollingworth of London & Country said: "Mortgage repayments are most households' biggest outgoing, so reviewing your rate now is likely to yield big savings. Even those with 15pc equity may find that there are better deals on offer, where previously the rates had looked unappealing."
As well as new mortgage rates getting cheaper, some SVRs have risen in the past year. Santander, Yorkshire Bank, Co-operative Bank and the Bank of Ireland which broke a promise to customers in doing so have increased rates. According to S & P, the average customer with 15pc equity can now save 0.5 percentage points by remortgaging, while someone with more than 40pc equity stands to save 2.1 percentage points.
Its researchers trawled through 2 million mortgages at some of Britain's biggest lenders and concluded that 51pc of customers would be better off by remortgaging. The calculations allowed for those already on fixed deals, as well as those with too little equity in their property.
Further analysis for The Daily Telegraph shows the size of the potential savings. For example, a borrower with a £300,000 mortgage paying 6.08pc at Kent Reliance, which has one of the higher SVRs, would face monthly repayments of £2,163.
By switching to the leading 1.64pc fix at Yorkshire Building Society, monthly repayments would fall to £1,467 a saving of £696. The total saving over a two-year period is £14,292 once arrangement fees (£1,675), valuation (£390) and legal costs (£350) are taken into account.
Norwich & Peterborough offers a slightly higher 1.99pc two-year rate, but with lower arrangement fees of £295. This boosts the total saving over two years to £15,231. Even moving from a lower SVR of 4.75pc would reduce bills by £472 a month.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: "Always work out the total cost of the deal rate plus fees when comparing products, rather than going purely by rate. It will differ according to the size of your loan, so checking the total cost ensures you don't pay over the odds in the long run."
Mr Boulger said many borrowers should consider a five-year fix. "For most people, five years makes more sense, assuming you have no plans to move within that time. You still get a significantly better rate than most SVRs, the fees are lower, and you don't have to pay to remortgage again for five years."
Switching to a five-year fix with Norwich & Peterborough at 2.59pc would cut repayments to £1,603 a month a saving of £560 per month against the rate of 6.08pc.
After paying the £295 arrangement fee, that would give a total saving of £33,321 over five years. Top deals for those with a 25pc deposit or equity include the 2.85pc loan offered by the Post Office, which comes with a £995 fee.
Home owners are already piling into these new deals, figures show. In May, remortgaging picked up considerably, rising by 20pc on the same month in 2012 and reaching a two-year high. The numbers fell a little last month, but are expected to pick up again.
Our rate fell from 6pc to 2.85pc
William and Coralie Fletcher, pictured, have secured a five-year fixed deal at 2.85pc through London & Country just as their lender moves them to its 6pc SVR.
The couple have just completed renovation work on their Victorian villa in Maidenhead, Berkshire, which they bought in a dilapidated state nearly two years ago.
Mr Fletcher, 33, a technology purchaser for children's shop Toys R Us, said: "We were living in south London and property prices were too high for us to buy. When we came across this run-down Victorian villa near the Thames and the forthcoming Crossrail terminal, it was ideal and we saw a great opportunity."
The couple managed to get a 15pc deposit on the £370,000 property and have spent more than a year renovating every room from scratch, rewiring and putting in new plumbing. It is now worth £500,000.
"That has opened up some super mortgage rates for us, as we now have 34pc equity," Mr Fletcher said.
Mr Boulger said other ways to increase equity in your home were waiting for house prices to rise or paying down the debt using savings.
"Mortgage rates are unlikely to fall any lower," he said. "But house prices could rise by 3pc or 4pc this year so if those with less equity can wait six months, they might be in an even better position."
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