Remortgages will get boost with interest rate rise

Conveyancing Alliance is expecting remortgage activity to rise as more borrowers find themselves on increasingly uncompetitive SVRs.

But remortgage activity in Q2 for both instructions and completions has remained at broadly the same low level it has been at for the past 18 months, their data shows.

But the online surveyor says borrowers will look for better rates and products particularly given that many lenders are raising SVRs without a corresponding increase in base rate.

It also anticipates a significant increase in remortgaging as and when the Monetary Policy Committee raises the base rate

There was a 33% increase in purchase instructions in Q2 2010, data from Conveyancing Alliance shows.

The increase translates into a 53% year-on-year increase from Q2 2009. 

Purchase completions for Q2 are 21% up on the previous three months, delivering a 47% increase on the same period a year ago.

Harpal Singh, managing director of Conveyancing Alliance Ltd, says: “At the end of Q1 2010 we had noticed a slight increase in remortgage instructions and anticipated that this may well translate into an increase in quarter two.  It is disappointing to see that this hasn’t been the case and it still seems that many borrowers are still happy to sit on their current SVR deal, particularly if their lender is unable to increase their rate by more than 2% over base rate. 

“However, there are an increasing number of borrowers who now find themselves on SVRs 4/5% above base rate and this is clearly where advisers should be urging at the very least a reconsideration of remortgaging. It is still our belief that remortgaging activity will rise from this low base over the next six to twelve months, particularly if the base rate is increased during that period.”