ARCHIVED ARTICLE This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Image of Derin Clark

Derin Clark

Online Reporter
Published: 21/12/2020
first time buyer mortgage house key

News contents

The economic uncertainty caused by the Coronavirus pandemic has had a significant impact on mortgage interest rates this year, with rates falling to record lows as well as increasing year-on-year.

With the mortgage market fluctuating throughout the year, we’ve looked at what has happened to mortgage rates in 2020 to help borrowers decide whether they should remortgage as we head into 2021.

Mortgage rates in 2020

Although base rate being cut to 0.1% would make borrowing cheaper for consumers, lenders factor in a number of considerations when setting rates including risk of lending. As such, the cut is base rate did not lead to a decrease in some mortgage rates. For example, the average two year fixed mortgage rate is higher year-on-year, increasing from 2.44% on 1 December 2019 to 2.49% on 1 December 2020. Saying this, during July the average rate on a two and five year fixed mortgage both fell to record lows of 1.99% and 2.25% respectively. In addition to this, the average five year fixed mortgage rate is now lower compared to a year ago, falling from 2.74% on 1 December 2019 to 2.69% on 1 December 2020.


Mortgage market analysis
Average mortgage rates 1 December 2019 1 January 2020 1 March 2020 1 July 2020 1 September 2020 1 December 2020
Standard variable rate (SVR) 4.89% 4.90% 4.90% 4.48% 4.44% 4.41%
Two year fixed mortgage 2.44% 2.44% 2.43% 1.99% 2.24% 2.49%
Five year fixed mortgage 2.74% 2.74% 2.74% 2.25% 2.49% 2.69%
10 year fixed mortgage 2.77% 2.78% 2.72% 2.61% 2.69% 2.85%


Despite interest rates on mortgages fluctuating throughout the year, borrowers on a standard variable rate (SVR) would still likely be better off switching to a fixed deal. As Rachel Springall, finance expert at, explained: “The motivation to remortgage can clearly be seen based on the rate differential between the average two year fixed rate at 2.49% and average SVR at 4.41%. Within the first two years, the amount that can be saved on repayments between the average SVR and two year fixed average rate is over £3,600 – which is based on a £150,000 mortgage over a 25-year term on a repayment basis. Borrowers about come off a five year fixed rate mortgage may also wish to find a new deal, as falling onto the average SVR can see their repayments rise, and five year fixed rates are lower today at 2.69% on average compared to 3.27% in 2015.

“Interest rates across two, five and 10 year mortgages remain volatile and product availability and caution among lenders have been a combined influence. In comparison, in 2019 there was a notable rate war among lenders, and some pointed to a squeeze on their profit margins due to such vigorous pricing. In 2020 the picture has been much more muddied, as lenders prioritised protecting their existing borrowers and worked hard to cope with processing new business. The most notable rise over the past year has been seen on 10 year fixed mortgages, with the average rate up by 0.08%, now standing at 2.85%.

“Those borrowers looking to take out a mortgage deal in 2020 may well have been hit by delays with their application or if they had a small deposit, lost out on securing a deal before the market contracted in response to the Coronavirus pandemic. Indeed, those looking to remortgage or are a first-time buyer with a small deposit may well still be waiting to find a deal suitable to them, but thankfully in recent weeks we have seen some lenders dip back into this arena.

“Seeking independent financial advice is still a wise move for any borrower hoping to navigate the mortgage maze. It is too early to tell what might impact the mortgage market in 2021, but there may well be a rush of applications to take advantage of the stamp duty relief. Lenders will have to continue to work hard to retain existing customers throughout next year and carefully assess the impact of taking on new borrowers in these challenging times.”

Mortgage borrowers looking to get the best deals can compare rates on our mortgage comparison charts. Alternatively, those wanting help with securing the best deal for their individual needs should consider speaking to a mortgage broker.


Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time. Links to third parties on this page are paid for by the third party. You can find out more about the individual products by visiting their site. will receive a small payment if you use their services after you click through to their site. All information is subject to change without notice. Please check all terms before making any decisions. This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice. will never contact you by phone to sell you any financial product. Any calls like this are not from Moneyfacts. Emails sent by will always be from Be ScamSmart. will never contact you by phone to sell you any financial product. Any calls like this are not from Moneyfacts. Emails sent by will always be from Be ScamSmart.