Remortgagers could cover Christmas with savings from lower mortgage rates
The latest research by award-winning mortgage adviser, Alexander Hall, has revealed that those currently approaching the end of their fixed-term mortgage could be in for an early Christmas present, as recent improvements in the mortgage market mean the savings available to them could more than pay for the increased cost of the next three Christmases.
Alexander Hall analysed the average monthly mortgage cost for a homebuyer who locked in a two-year fixed-rate deal in October 2023 and how that figure compares to the cost of remortgaging today. The firm then looked at how the reduced repayment could help offset the additional spending many households face during the festive season.
The research shows that two years ago, the average UK house price stood at £260,129, meaning that with a 15% deposit of £39,019, a typical buyer would have required a £221,110 mortgage. Based on the average two-year fixed rate of 5.94% at the time, over a 25-year term, this equated to a full monthly repayment of £1,417.
Fast forward to today, and that same borrower remortgaging in October 2025 would now owe around £212,925, with the average two-year fixed rate having fallen to 4.33%. With a remaining 23-year term, this would see their monthly repayment drop to £1,220 – a reduction of 13.9% or £196.89 per month.
Further analysis from Alexander Hall shows that the average household spends around £2,460 per month, but this rises to £3,173 in December, an increase of 29% or £713 as we push the boat out over the festive season.
So whilst the £196.89 monthly saving on their mortgage might not cushion the Christmas spending blow this year, it does equate to an annual saving of £2,362.68.
This means that when next Christmas rolls around, they would have more than enough in their savings pot to cover the increased cost of Christmas spending for the next three Christmases.
Richard Merrett, Managing Director of Alexander Hall, commented:
“Last week’s decision to hold the base rate may have dampened the enthusiasm of some homeowners approaching the end of their fixed term, but the truth is that we’ve already seen notable improvements across the mortgage landscape in recent months, giving borrowers plenty of reason for early Christmas cheer.
The average remortgager today is saving close to £200 a month on repayments compared to those locking in two years ago. While that might not soften the impact of this year’s Christmas spending, it will certainly make a meaningful difference to their household finances when next December rolls around.
Of course, with one last base rate decision from the Bank of England due in December, there’s still a chance that Father Christmas could deliver a further mortgage market boost before the year is out.
However, as we head towards 2026, we’re already seeing growing mortgage affordability help to restore stability and confidence across the property market and, once the dust has settled on the Autumn Budget, this positive momentum is only likely to increase further.”
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