According to the Council of Mortgage Lenders, both residential and buy to let remortgaging is expected to continue to grow in the second half of 2017. Low mortgage rates has continued to encourage borrowers to refinance and move away from their lender’s SVR amongst tough competition between lenders.
But despite the continuing strength of the remortgage sector, homeowners are being warned not to be complacent. For those still considering the options and weighing up the benefits, the time to remortgage could be now.
A surprise result at the Bank of England
Nearly three in five people that remortgaged in May said they believed the average mortgage rate would be unlikely to change over the next 12 months. But June’s vote on interest rates from the Bank of England’s Monetary Policy Committee (MPC), kept rates at 0.25% by only five votes to three.
Despite some signs of a possible economic slowdown, three members of the committee voted for an interest rise amidst rising inflation. It has been a full decade since the Bank of England last raised the base rate and this result has ruffled several feathers in the industry.
A warning of complacency amidst low rates
There are currently millions of people sitting on their lender’s Standard Variable Rate (SVR). In fact according to the BSA, 2.5 million mortgage borrowers have never experienced a base rate rise.
Homeowners are therefore currently being urged to be wary of complacency and to take advantage, especially as lenders compete for new customers, helping drive down the cost of mortgages. Data from the Mortgage Brain shows that the cost of a five-year fixed rate loan at 70% LTV is now only 2.04%. This is a full 2% lower than it was at the start of April 2017.
But many experts are saying that after the MPC’s latest vote and due to rising inflation, we are as close to a rise in base rate as we have ever been in recent years.
If your current deal is reaching its end or you would like to find out whether you could be saving money on your mortgage, contact one of our advisers to discuss your options.