How to Brexit-Proof Your Remortgage

Last year saw more people than ever before choose a fixed-term remortgage product in the UK.

Almost 9/10 people would rather take out a fix over a variable rate or tracker mortgage.

This is what a study by Experian shows. It pinpointed the types of mortgages that potential borrowers now most search for. The findings revealed that fixed-term deals are the preferred choice for an overwhelming 89% of people.

Uncertainty is the Only Certainty

So what’s behind this surge in popularity for fixed-term remortgages? It seems it’s the “Brexit fog“. This is what homeowners today are trying to see their way through – to use the term that the governor of the Bank of England Mark Carney has coined.

Remortgaging overall has reached its highest level in almost a decade too. This has been fueled, in large part, by continuing uncertainty around Brexit, its aftermath and the economy, according to the latest UK Finance figures.

Research has found that 32% of people think their personal finances will get worse as a result of the UK leaving the EU. Only 8% expect their finances to improve. Nearly 38% think their finances will “be much the same”. And almost a quarter say they “don’t know”, according to a survey by YouGov.

A mortgage is the biggest outgoing for most householders. In the current uncertain economic climate, it’s hardly surprising that more of us are thinking it makes good sense to nail down its costs.

It makes even better sense in the light of recent economic data. ONS (Office for National Statistics) figures show that since the Referendum:

• pay rises have been sluggish
• higher-than-expected inflation has been experienced
• business investment has slowed

So, if you, like most people, are wondering: “How can I Brexit-proof myself?” then remortgaging may well be a good place to start.

The Security of a Fix

Might remortgaging to a fix be right for you? The first thing to ask yourself is this: “How much surety do I need for my mortgage repayments?”

Fixing your rate means that the interest you’ll pay on your mortgage will stay the same – right until the end of the deal. That’s whatever happens to the Bank of England’s rate.

If you know an interest rate rise will push you close to the brink, then a fixed remortgage will give you peace of mind. You’ll get certainty over what you’ll pay for the duration of the deal. You’ll also be much more confident that you can budget to afford it.

Record-High fixed-rate Choices

The rise in popularity in fixed-rate remortgages is good news for choice. It means that lenders have all been working extra hard to outdo each other by offering more competitive deals.

This is clear from the latest data from Moneyfacts UK Mortgage Trends Treasury Report.

It shows that there are more fixed-rate residential mortgage products available now than at any other time since data started being recorded in 2007. That’s across most loan-to-value (LTV) tiers too. There are plenty of good deals for grabs at all maximum 60%, 75%, 85% and 90% LTV tiers.

There’s also good news if you’re tempted to fix for longer than the typical two years.

The latest research from Moneyfacts.co.uk shows this. The rate gap between two-year and five-year fixed rate mortgages has fallen to its lowest level since 2013. The growth in lender competition is the reason for this.

Do you have questions about remortgaging to a fixed product or would like some advice on the right product type for your situation? We’re happy to talk it through with you here.

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