So it’s now official. Bank of England Governor Mark Carney has spoken. Interest rates will increase “in the relatively near term”.
While this is good news for savers, for those with mortgages that are not fixed, it’s not such good news. Especially if you consider that just 10 years ago, interest rates were 5.75%.
Strong Reasons to Remortgage Fast if You can!
If you’re a homeowner who knows that you’re likely to want to stay put for the next five years. Plus you’ve equity in your home, there’s still time to remortgage fast.
Thousands of people in Britain have realised the sense of securing their outgoings. It’s why so many have remortgaged in the last few months.
In fact, a record number of remortgagors did this in August. They opted not for short-term fixes but for five-year fixed rates, in a bid to head off a potential rise in interest rates.
The FT reports that the numbers of people plumping for a five-year fixed rate rose from 37% to 39%.
This year, so far, in total, the number of remortgagers has increased by 16% compared to last year.
Don’t Hang Around
Already, lenders have begun preparing for the predicted rate rise. They’ve started slowly increasing the cost of their fixed-rate mortgages. In the coming months, the costs of lending are predicted to increase further.
The reason for the rise is that market economics means that lenders are having to pay more to access the funds they need to lend out to property owners.
Base rates themselves may have not yet risen but the so-called ‘swap rates’ have gone up in recent weeks.
These are what lenders base their pricing decisions upon. Right now they’re reflecting the anticipation that base rates will go up pretty soon.
Hunkering Down for the Future
Six months ago the rush on remortgaging was being driven by the fact that homeowners could do so to release equity. They could use this to spend on extras such as holidays and home improvements. But many now seem to have a different reason.
Moneyfacts.co.uk reports: “Interestingly, many appear to be remortgaging to secure their finances, rather than increase the size of their loans.
“The low mortgage rates of recent years meant that many had previously been opting for the latter, capitalising on the chance to release equity and get a valuable cash injection without paying too much for the privilege.
“But it seems that many are now taking a more long-term view of their finances.”
According to the National Institute of Economic and Social Research, the UK economy will bounce back in 2018. if it does, it’s likely the Bank of England will raise interest rates to a more normal level than before Brexit.
Are You Remortgage Ready?
If you’ve got an existing mortgage now, should you consider remortgaging fast?
It’s likely to be beneficial to you in these scenarios
- You’ve equity in your property
- You’re not locked into a fixed deal
- You’re nearing the end of your term
- You’re on your lender’s standard variable rate (SVR)
(SVR is the default rate most fixes and trackers revert to when the introductory deal finishes.)
Would you like some remortgaging advice? We offer a comprehensive range of first charge mortgages (but not deals you can only get by going direct to a lender). Find out more here.