Time To Remortgage?

There has been so much speculation over the previous months as to when the remortgage market will begin to return. Various questions have been raised such as how low will rates have to be to make moving worthwhile, how many people will actually be able to remortgage given strict new guidelines and lending policies and how long will Bank Base continue to stay stable?

For an increasing number, recent movements by some of the main high street lenders have meant that remortgaging is once again on the agenda.

Product pricing has now come down to the extent that many who were prepared to sit on variable rates of at least 3.5% do not want to take the risk any more of missing out. After all, why sit on a variable rate at 3.5%, which is very unlikely to reduce further, when you can fix for 2 years at 3.59%, (4.2% APR), or even reduce your payments further to 2.59%, (4.4% APR)?

There are only a couple of mainstream lenders, C&G and Nationwide, with existing variable rates as low as 2.5%, with many more above 4%. As the question is when, not if, rates are going to rise further and the fact that when it does happen lenders variable rates could rise by more than the actual Bank Base Rate change, taking advantage of low costs now could make all the difference.

One of the best examples of the recent return of competition is Northern Rock’s return to form, something that due to European legislation may not be allowed to continue beyond next year. At 70% Loan-To-Value, they have a highly competitive 3 year fixed at 4.39%, (4.7% APR) and a market leading 5 year fixed at 4.99%, (4.9% APR) with lower fees than many of their competition and unique flexible features.

A 5 year fixed rate below 5% has always been a highly prized product in any market, and with rates undoubtedly set to increase over the next 5 years this really does look like terrific value.

With many lenders still offering remortgage incentives such as a free valuation and legal fees, for those with loan-to-values of 75% or less now seems as good a time as any to move your mortgage.

I have also harped on to anyone who will listen about the benefits of offsetting for those with decent levels of savings.
Woolwich still have the best offset product at 70% Loan-to-Value which, at 2.97%,(3.1% APR), is proving more popular with savvy buyers who have money on deposit to play with. Crudely speaking an offset mortgage means you don’t pay tax on your savings, they are safe even if above the £50,000 Government Savings Guarantee scheme, and either your mortgage payments go down or you can cut the term of your mortgage considerably.