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Remortgaging cheaper than most SVR deals

The majority of borrowers sitting on SVRs would be better off remortgaging, according to research from Moneysupermarket.com.

Following the recent hikes to SVRs from lenders such as Skipton Building Society and Nationwide’s The Mortgage Works and UCB Home Loans, Moneysupermarket.com says that that slowing remortgage market has staged a comeback.

And the comparison website says that even when arrangement fees are factored in, the cheapest two-year fixed rate deal is still less expensive than the majority of SVRs.

Moneysupermarket.com says that the cheapest two-year fixed rate mortgage is First Direct’s 3.29% deal available up to 75% LTV with a £998 arrangement fee.

Taking into account the fee, the website calculates the actual cost of this mortgage would be 3.8% after two years, which is only beaten by 13 out of 85 current SVRs.

Hannah-Mercedes Skenfield, mortgages channel manager at Moneysupermarket.com, says: “The prospect of an arrangement fee can be off-putting but our analysis shows that even when taking the fee into consideration and provided borrowers have at least 25% equity in their properties, the vast majority of SVR deals do not compete with the top fixed rates.”

For trackers, the best deal according to Moneysupermarket.com is Alliance & Leicester’s two-year tracker at 2.49%, available up to 70% LTV and with a £995 fee.

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

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  • Mortgagemap.co.uk 9th May 2010 at 10:59 pm

    Although the number of mortgage and remortgage enquiries we are receiving is increasing, we are having terrible trouble getting applications through to “offer” stage.

    Credit issues and tougher lending criteria is really making things difficult for us. I wish you well because if things don’t pick up for us soon we may not be in business much longer.

    Hopefully things will get better if we ever get this “hung parliament” sorted out and the financial markets can ease slightly.

  • drumfada 12th March 2010 at 12:01 pm

    Anon 9.16 – Schoolboy error the comment from anon 12.17 is spot on.

  • Chris Powell 10th February 2010 at 12:17 pm

    Once again a broker displays his complete ignorance of the way mortgage funding works. I see this so often in these letters that I am amazed that some of these guys ever passed CeMap. Anon 9.16 – please egt it into your head that BBR has nothing to do with mortgage rates and never really has. The mortgage rate charged is based on the costs of the funds being lent. At the moment the only way most lenders can get funds is from investors and thos invetsors sure as heck won’t accept BBR for their money when State backed lenders are offering anything up to 4%. Then there is the issue of increased liquidity required by the FSA which has to be invested by the lender unprofitably because that is the instructions given. The remaining lenders are then paying for the follies of the failed banks through the FSCS.

    The simple maths is we borrow money at about 3%, we have to invest 30% of it in Government gilts paying less than 0.50% and we have to cover our overheads of aout 1%. As a Building Society the profits are the main thing we have to add to capital reserves. Now I wonder if you would be happy to lend your personal money at 2% over BBR if it had cost you over 4% to obtain it.

    For heaven’s sake understand the business you are in and stop making facile references to BBR

  • Claire 10th February 2010 at 12:01 pm

    Hmm dear Avenue & Co. BBR + 1.99% is actually 2.49% so they were spot on. Perhaps you should check your maths?

    Avenue & Co Private Finance | 8 Feb 2010 1:53 pm

    Sorry Moneysuopermarket, the best tracker rate at 70% LTV is currently BBR + 1.99% for 2 yrs with a lender fee of £995 from Abbey.

    Moneysupermarket don’t have this rate as it is an exclusive products for brokers available to selected intermediaries – including us.

    Testament once again that online web comparison sites dont offer a whole of market picture.

  • salil chaudhari 8th February 2010 at 9:16 pm

    I think there will be casualties in the mortgage industry as lenders with the highest SVR’S are priced out of the market. It is dangerous to act on misleading information on camparison sites.Brokers are definitely the best bet.It is absolutely ludicrous to charge such horrendous SVR’s when the BBR is at 0.5%.I wonder how hard or easy it would be for self certificated mortgage holders to remortgage when there have been no change in their circumstances and at what rate?

  • anon 8th February 2010 at 2:57 pm

    Again another point missed is those coming to the end of a rate with a sub prime lender who revert to a loaded Libor rate.. I have found most of these reversionary rates are now much cheaper than any tracker rate available on the market so that takes out another large chunk of available business opportunities.

  • Andy C 8th February 2010 at 2:14 pm

    Wow, what a revelation! Talk about stating the obvious Hannah-Mercedes Skenfield. We all know that the majority of borrowers sitting on SVRs would be better off remortgaging but of course the missing part of this statement is that it’s unlikely that most of these people CAN remortgage. Chances are most of these borrowers are needing high LTV loans or are self employed with no accounts therefore meaning it’s likely that their current lender is UCB or TMW anyway – exactly the reason why these lenders are putting up their SVRs as they know they have a captive audience. Call me a sceptic but will the majority of the better quality leads this “informed” statement from Moneysupermarket.com generates via their website be fed to L&C brokers?

  • Neil Southern 8th February 2010 at 2:01 pm

    Couldn’t agree more with comment from Anonymous at 1.49pm. Again those with the loudest voices use the financial press to ‘confuse’ the general public. Speak to your local broker they’ll tell you the real truth about the mortgage market.

  • Anonymous 8th February 2010 at 1:59 pm

    This is why customers need financial ‘advice’ rather than going to comparison websites as the general public will look at the rates and not understand the implications of the product.

    Especially when the tracker is involved! rates will rise again as they cant get any lower then what position will people be in??

  • Douglas Shillinglaw 8th February 2010 at 1:55 pm

    When are lenders going to offer decent remortgage products for people (including myself)who have a LTV above 75% but below 85%. You either get offered current lender’s SVR (for most lenders this is way above BOE rate) or a 3 year tie-in product which is uncompetitive. For example, Abbey PLC offered me a 3.99% 2 year Tracker rate increasing to 4.50% in year 3 & their SVR is 4.24% currently becuase they state I am in a high risk band because my property value has decreased, etc according to their automatic system. Lenders do not have the decency to wait until the BOE rate increases to raise their SVR’s now, where is the TCF in that?

  • Avenue & Co Private Finance 8th February 2010 at 1:53 pm

    Sorry Moneysuopermarket, the best tracker rate at 70% LTV is currently BBR + 1.99% for 2 yrs with a lender fee of £995 from Abbey.

    Moneysupermarket don’t have this rate as it is an exclusive products for brokers available to selected intermediaries – including us.

    Testament once again that online web comparison sites dont offer a whole of market picture.

  • brian harris 8th February 2010 at 1:49 pm

    This is a highly misleading article. The ‘best’ rates are only available generally speaking to those with an abundance of equity. Those with a fairly small equity which appears to be the majority of those wishing to remortgage would not qualify for these rates.