Are You Considering to Remortgage?
Are you considering remortgaging away from your Standard Variable Rate (SVR)? If you’re tempted to lock into a safe fixed-rate remortgage, our word to the wise is this:
Right now is a superb moment to shift to a fixed-rate remortgage if you’re looking to save money on your monthly mortgage outgoings.
There are thousands of enticing remortgage fixed-rate deals on offer to take advantage of. How long they will last is unclear.
This is the advice of finance experts across the board, including Moneyfacts. It comes in light of the remortgage rates cut that the current competitive market has caused.
Scores of lenders have reacted to an increased demand for fixed-rate remortgage deals by decreasing their interest rates. They are all keen to bring new borrowers on board.
Fixed-Rate Wars means Great Deals are to Be Had!
In fact, Moneyfacts describes the scenario as a “fixed-rate war”.
What has prompted this level of competition between lenders?
The latest borrowing figures from the Bank of England show that remortgage approvals are soaring. They increased from 48,900 in November 2018 to 50,400 in December.
The driver, says Moneyfacts, is this. “Borrowers are seeking peace of mind amid increasing economic uncertainty”.
Here’s what Rachel Springall, finance expert at Moneyfacts, has to say. “Remortgage customers who locked into a two-year fixed deal at the end of 2018 may have missed out on a cheaper deal. The average rate continues to decrease, dropping by 0.03% since January to stand at 2.49% today.
“Yet those who waited may now save even more by moving off their SVR and instead locking into a two-year fixed deal.”
Her analysis, based on a £200,000 mortgage over a 25-year term on a repayment mortgage basis, shows this. The average monthly repayment on the average two-year fixed-rate remortgage of 2.49% would cost £896.23.
“When compared to the current average SVR of 4.89 per cent, this would see borrowers save £260.17 per month,” she says.
The price war has also affected longer-term fixes. This includes five-year and 10-year products, which have also increased in popularity.
More homebuyers, it seems, are looking for longer-term certainty in the current climate.
The advice now, if you are in a situation to remortgage, is not to take a wait-and-see approach but enjoy it while it lasts.
Remortgagors are unlikely to have ever had it so good as now. The current lending environment is unlikely to continue indefinitely.
A Fixed Rate Remortgage has Many Pros
A fixed rate has lots of plusses, not least security. It means you’ll know exactly what your mortgage will cost over the term of the deal.
Your payments won’t ever go up over the life of the fix either. That’s no matter what happens to the Bank of England rate. So you can budget more accurately.
The downside is that you lose flexibility. If you want to get out early, you can expect to pay a penalty.
But if a fixed rate remortgage fits your circumstances right now, you’re well-timed to secure an excellent deal. Do you have questions about remortgaging or would like some advice on the right product type for your situation? We are happy to help you here.