Remortgaging is at a 10-year low, according to the Council of Mortgage Lenders, with just 25,000 home owners switching their mortgage in August – down 13% on July and 19% lower than a year earlier.
The official figures will come as no surprise to brokers, who are painfully aware that there has been little demand for remortgaging.
With interest rates held at 0.5% for more than a year and a half, and not looking like they are going to rise any time soon, borrowers on cheap SVRs aren’t concerned enough to switch to a new fixed or What hasn’t helped is that remortgage rates haven’t been attractive enough to persuade home owners to take the plunge.
But is that about to change? Some great fixed and tracker rates have been launched over the past couple of weeks by the Royal Bank of Scotland, Barclays and ING, making remortgaging more attractive than it has been in a long while.
While lenders continue to enjoy healthy margins, home owners on the cheapest SVRs may finally be better off remortgaging.
For example, Barclays’ Great Escape tracker is priced at 2.18% above the Bank of England base rate for those with 30% equity, with the added benefit of no application fee, free legals and valuation, and £300 cashback to cover the cost of the existing lender’s exit fee.
Public sector workers facing redundancy might want to consider remortgaging while they have the chance
Borrowers can also ’switch and fix’, enabling them to move onto a fix when interest rates start to rise.
For those who prefer security from the outset, five-year fixes are available from less than 4% from RBS and ING – admittedly for those with a sizeable level of equity in their homes – but it is unlikely to get much better than this.
But it’s not just about cheap remortgage rates finally becoming available.
With the Spending Review out of the way and house prices potentially going to slip further in some areas, remortgaging becomes attractive on many levels.
If house prices fall, home owners will want to remortgage sooner rather than later before their LTV rises.
Public sector workers who face redundancy might also want to consider remortgaging while they have the chance – a five-year fix gives security at cheap rates.
Future austerity measures mean borrowers’ financial situations are likely to get worse, so fixing now will help with budgeting.
Of course, many will only get serious about remortgaging once it looks as though interest rates are going to rise.
But by the time it happens, remortgage fixes and tracker rates are going to be a lot higher than they are now so those who are in a position to remortgage, because they have a low LTV and can meet lenders’ stricter requirements, should start thinking about it.
For brokers it’s worth getting in touch with clients who are sat on their lenders’ SVR.