Remortgaging activity has garnered a huge amount of media coverage recently, and with good reason – the sector is finally experiencing the resurgence it needs, and the latest figures from Yorkshire Building Society provide yet more confirmation of that fact.
Their research found that the number of remortgage applications over the summer was up by more than 70% year-on-year, as consumers snapped up record low rates while they were still available. Ongoing speculation over the path of base rate undoubtedly fuelled this level of activity, and considering that mortgage rates are already showing signs of rising, it makes good sense for borrowers to act fast.
Indeed, there's been a particular upsurge from June this year: remortgage applications rose by 18% compared with the same month in 2014, while July saw a massive 127% jump year-on-year. The growth rate slowed slightly in August, but at 87%, it's still a significant increase.
As the figures show, far more households have decided to remortgage this summer than during the last, and it isn't hard to see why. Our own data shows that mortgage rates were at a record low during the summer, with the average two-year fixed rate falling by 0.16% from the start of July to 2.76% at the beginning of August, the lowest rate on record. However, many borrowers realise that these kinds of rates won't be around forever, so the combination of a highly competitive market and heightened concern over future increases has led to the influx of remortgagors.
"Mortgage rates have been at record lows this year, but given the murmurings of a base rate rise, it is expected that the lowest deals won't be around forever," said Rachel Springall, finance expert at Moneyfacts. "This expectation has led to a surge in customers looking to get a better deal right now to ensure that they don't miss out."
It's the sheer level of uncertainty that could be encouraging borrowers to remortgage, particularly if they're on their lender's standard variable rate (SVR). These rates aren't set in stone, and because of the potential for them to rise in the next few years, borrowers will instead be looking for security – hence the desire to remortgage to a low-cost fixed rate to secure set repayments and ensure efficient budgeting.
Competition is rife at the moment, so now could be a great time to reconsider your options, particularly if you're on your lender's SVR. However, as Rachel points out, you'll want to take a thorough look at every single aspect of the mortgage, as the rate is only one part of the deal. Instead, you'll want to take into account the true cost of the mortgage, including any fees and incentives, as it's these aspects that can really make or break a decision.
Once you've got a few calculations you can truly see which deal would be best for you, and ultimately, which could save you money in the years ahead. Check out our best buys and use our mortgage calculator to get started, and see what kind of repayments you could look forward to.
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