Remortgage products come back into vogue

The remortgage market has started to make a comeback, as research reveals that most borrowers sitting on their lenders’ SVRs would be better off remortgaging.

Moneysupermarket.com has cal-culated that the cheapest two-year fixed rate deal works out less expen-sive than the majority of SVRs, even after arrangement fees are taken into account.

The comparison website says the cheapest two-year fixed rate is available from First Direct at 3.29% up to 75% LTV with an arrangement fee of £998 .

Taking into account the fee, Moneysupermarket.com says the true cost of this mortgage is 3.8% after two years, a rate beaten by just 13 out of 85 current SVRs.

When it comes to trackers, the best deal according to the website is Alliance & Leicester’s two-year product at 2.49%, available up to 70% LTV with a £995 fee.

Once the fee has been factored in the cost of this mortgage equates to 3.07%, beating all but seven SVRs currently available.

Ray Boulger, senior technical manager at John Charcol, says: “In the past few weeks there has been a lot of activity at the high LTV end of the market. As a rule, borrowers on SVRs of around 3.5% who have at least 15% equity should consider remortgaging.

“This research flags up that remortgaging is coming back into vogue and should prompt Joe Public to consider taking that route.”

Paul Welch, managing director of Largemortgageloans.com, agrees. He says that following Skipton Building Society’s recent SVR hike and with other lenders likely to follow its lead, borrowers stand to benefit from remortgaging.

But recent research from Mortgage Advice Bureau shows that remortgaging activity fell 50% in 2009 compared with the previous year due to a lack of high LTV products.

Brian Murphy, head of lending at Mortgage Advice Bureau, says: “This left many home owners with little choice other than to revert to their lenders’ SVRs and wait.”