Are you coming to the end of a fixed rate mortgage term, or have you been comfortably sitting on your lender's standard variable rate (SVR) for a while, wondering what to do next? Either way, it's time to take action, because our research shows that there's now more incentive to remortgage than there has been in years!
Our figures show that there's a growing gap between the current SVR and the average mortgage rate of two years ago, meaning those who are now coming to the end of a two-year fixed rate would be wise to consider remortgaging.
This is because the average SVR, which currently stands at 4.84%, is a whopping 1.37% higher than the average two-year mortgage rate of September 2013 (3.47%). This means that borrowers who are now coming to the end of that deal and revert to their lender's SVR would face a rate increase of 1.37%, which could add a huge amount to their monthly repayments.
Conversely, those who remortgage to the current average two-year deal of 2.72% would enjoy a rate reduction of 0.75%, which could actually save them money. Really, given the savings involved – and the potential rate rise should you revert – why wouldn't you want to remortgage? The gap between the average SVR and the rate of two years ago is growing, too, which means people now have more motivation to remortgage than they have done in years.
We've recorded this pattern for several months now, and we've been speculating ever since that remortgaging activity should begin to pick up as a result. Well, it has! Latest statistics from the British Bankers' Association (BBA) show that remortgaging activity saw a significant uptick in July (the most up-to-date figures available), with the number of remortgages approved being up almost 29% year-on-year.
Additional figures from Connells Survey & Valuation show that remortgaging activity outperformed all other areas of the housing market in August, with the number of valuations for remortgaging rising by 25% compared with July. Not only that, but on an annual basis, the number of remortgaging valuations rose by 102%, with activity doubling in the space of 12 months.
So, it seems that people are finally starting to take notice! Much of the improvement could also be down to ongoing speculation over base rate, with many borrowers wanting to remortgage to a better deal while rates are still low. Now's a great time to do so, because as we reported earlier this week, mortgage rates are already beginning to edge up – so don't hang around! Check out the top remortgage deals to beat the rate rise, and potentially lower your repayments in the process.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
Moneyfacts.co.uk will, like most other websites, place cookies onto your computer’s
hard drive. This includes tracking cookies.