Is Now The Time To Look At Your Remortgage

Published: 28th May 2017

With Article 50 triggered, two years of negotiations to wade through and now a General Election on the horizon, there is a big question mark over the future of Britain’s economy. Markets react well to stability and have a direct knock-on effect on our housing prices and interest rates. With this in mind, is now the time to change your mortgage to something a little more future-proof?

Negatives of a Standard Variable Rate mortgage
A lenders Standard Variable Rate (SVR) is managed at the bank or buildings societies own discretion and they are not obliged to pass on any Bank of England base rate increases or reductions! As the title suggests this rate is variable and can be increased by the lender at any time, regardless of if there any other movements in the market place or not. As this deal in many instances is also seen as a rate that you revert back to after your initial deal has finished and not one you proactively opt for at outset, there is little or no incentive to keep these products priced competitively. Due to the same reason they will not have benefited from the recent mortgage price war over the last 18 months and are typically priced at sometimes 2% more than other deals available within their own product range.

Fixed Rates are attractive too
The average two-year fixed rate mortgage is now 42% cheaper than it was this time in 2014, according to Bank of England data. The UK’s housing market is facing uncertain times, and expectations of lending growth are lowering. Borrowers are choosing longer term fixed rates due to their price and reliability, meaning that the remortgage market is shrinking. All these things are culminating in the only defence lenders have against competition: slashing prices.

The markets are making switching easy
So a lack of re-mortgaging and reduction in the prices of fixed rate deals, coupled with a potentially economically turbulent time in the next few years really points to only one option: start shopping around. Rates are in your favour and lenders are more than happy to have your business. Regular SVRs can be expensive, meaning a simple switch could potentially save you thousands in the long run. For every 1% reduction in your interest rate, for each £100,000 of borrowing you owe could save around £644 per year (based on a 25 year mortgage term on a repayment basis).

How do I know I’ve got the best deal?
Knowing that you’re getting the best rate on your mortgage is a great feeling, and it can be hard to know if the lender you are with has your best interests at heart. Why not give us a call and see how our specialised team can help you with transitioning to a new deal with a fantastic rate!