You might not consider your mortgage a savings vehicle. But right now, in times of increasing inflation, that’s exactly what remortgaging is.
Listen to what savings expert Monevator states. “An affordable mortgage secured on a real asset – a house – is an excellent thing to have at times of high inflation.”
The UK economy is currently experiencing increasing inflation. In fact, the UK inflation rate rose in August to 2.7%, the highest level in six months.
Monevator’s advice for you now? “Re-mortgage and save a fortune in interest. If you’re already a homeowner and you are not on a super-cheap mortgage, it’s got to be worth seeing how much you could save on mortgage repayments.”
But there’s another reason remortgaging now is a prudent ploy.
The Bank of England (BoE) raised rates by a quarter-point to 0.75% in August. This has put the bank rate at the highest level for nine years.
More rates rises are possible in the months ahead, the BoE indicated too. Recent wage data has raised the prospect of further increases to keep inflation under control.
Why does this matter to you? It does because the base rate controls how much lenders must pay to borrow money.
When the base rate rises, borrowing becomes more expensive. Lenders then pass this cost on to their mortgage customers.
That was what happened between 2 August and 3 September. Half of all mortgage providers raised their Standard Variable Rate (SVR) by the full 0.25%.
Even with the rate rise, remortgage deals are cheap by historic standards. They’re being kept low due to stiff competition between lenders to offer attractive remortgage offers.
Lock in Costs Now
But it does seem that the message is getting through about the current opportunity to pin down mortgage expenses through a cheap remortgage deal.
More and more money-savvy people are jumping on the remortgaging bandwagon. Most are shoring up against future rate raises by securing a cost-effective fixed repayment rate.
The residential remortgaging market saw its strongest summer in a decade. This is the result of a survey by UK Finance. It’s the trade association for the UK banking and financial services sector.
The figures by the industry trade body showed there were 46,900 new homeowner remortgages in July alone. That’s up by over 23% on the previous month. Homeowners also borrowed £8.7bn of remortgaging in the same period – a 26% increase year-on-year.
Remortgaging isn’t complicated. It’s what you do when you change the mortgage you have now on your home.
You can do this either by switching to a new lender or by swapping to a different deal with your existing lender.
So if, like many homeowners, you’ve let your mortgage slip onto the Standard Variable Rate (SVR), there’s only one question to ask yourself.
Why aren’t you grabbing the opportunity to remortgage now?