Are you wavering about the idea of remortgaging right now? The timeline below may help with your deliberations. We discuss and clarify the last major fluctuations of the remortgage interest rates in Britain.
This is especially true if you’re hedging your bets. Maybe you’re hoping there’ll be a better slew of remortgaging deals around the corner?
You’ll Rarely Have Had it Better.
The future, though, as you’ll see below, is less clear.
Trend 1: Historic highs
Were you unlucky enough to have had a mortgage back in the era of Margaret Thatcher and the 1979 Conservative government?
Then you might remember that UK base rates topped an eye-watering 17%. This giddy period prompted a housing market crash and repossessions to match.
Thatcher’s successor, John Major, lowered rates to 15% in 1992. By 1997, they were 7.25%
Trend 2: Bank of England takes control
The election of Tony Blair as prime minister took place in 1997. New chancellor Gordon Brown handed control of the setting of the base interest rate to an independent Bank of England. Blair’s administration was in power until 2007.
Interest rates wavered in this period as an attempt to reign in an over-inflating economy. Rates rose from 3.5% in July 2003 to 5.75% in July 2007.
Trend 3: US Mortgage Crash causes ripple effect
The last decade, we’ve all been living through the impact of the global financial crisis. In this time we’ve seen the Conservatives wrest power from the Labour party. They formed a coalition with the Liberal Democrats in 2010.
From 2007 onwards, the base remortgage interest rate tapered to its lowest level for 300 years. Starting at 5.75% in July 2007, it plummeted to 0.5% by March 2009. This was followed by a further fall to 0.25% in August 2016 and then a small rise back to 0.5% in November 2017.
Trend 4: Remortgaging bonanza
Fast forward to the end of 2018 and two-year fixed remortgage interest rates tend to come in at under 2%. The standard variable rate is a little higher at roughly 4%.
When you see the bank interest rate trajectory in context, one fact’s not surprising. UK homeowners have taken advantage of what are historically low rates.
Last year saw 1.6 million borrowers in the UK switch mortgage products. Of these, 1.18 million homeowners remortgaged. This means that in 2018, one in five homes in the UK carried out some form of remortgaging activity.
Trend 5: Brexit clouds future visibility of remortgage interest rates
In June 2016, then Prime Minister David Cameron held the EU Referendum. Turnout was 71.8%, with more than 30 million people voting. The referendum passed by a slim 51.9% to 48.1% margin, but there were stark differences across the UK. Most experts now agree that deal or no deal, Brexit is set to have a significant impact on the UK economy.
In March, the Bank of England voted to keep interest rates at 0.75%. But should we be bracing for a base rate shock in coming months?
Borrowers today have never had it so good. But the question is: how long can this continue?
Rates of 0.75% seem unthinkable compared to the levels of 17% in the 1980s. The current low interest rates we’re seeing are the lingering effect of the 2008 US mortgage crash. It is behind the worldwide downturn and current economic environment.
Decision-makers now say interest rates could go ‘in either direction’ after Brexit. It all depends on the economic outcome and sadly, no one has a crystal ball!
Are you confused about the best remortgaging option for your circumstances? You can get personalised, impartial advice on your remortgage by contacting us here.