Mortgage rates fall below 1.00% – should you remortgage now?

Homeowners looking to remortgage can now get a rate of below 1.00%, with two mortgage lenders offering mortgages at 0.99%.

TSB and Hinckley & Rugby Building Society both have mortgage deals offering rates of 0.99%.

TSB offers 0.99% (3.2% APRC) on a two year fixed deal, which is available at a 60% loan-to-value (LTV) and charges £1,495 in product fees. Hinckley & Rugby Building Society offers 0.99% (4.5% APRC) as a two year discounted variable, which is also available at a 65% LTV and requires a minimum loan of £100,000. It charges £699 in product fees.

Choosing a mortgage offering 0.99% can significantly reduce mortgage repayments, even with today’s highly competitive mortgage rates.

For example, a homeowner with a property valued at £350,000, who is looking to remortgage at 60% LTV on a 20-year term, would have mortgage repayments of £964.84. If the same homeowner remortgaged at the next lowest rate in the two year fixed remortgage chart, which is 1.04% (3.9% APRC) being offered by Platform, they would have monthly repayments of £969.53. This is £4.69 per month more than the repayments at 0.99% and over the two years the homeowner would be paying an extra £112.56.

If the same homeowner was to remortgage at a rate further down the chart of 1.33%, this would result in monthly repayments of £997.01. This is £32.17 more per month than repayments at 0.99% and, over a two-year period, would be an extra £772.08.

Clearly, with mortgage rates below 1.00% now available, homeowners coming to the end of their mortgage deal or who are already on their lender’s standard variable rate (SVR) should consider remortgaging to see if it will lower their monthly repayments.

Although remortgaging at a time when rates are competitively low may help to reduce monthly mortgage repayments, there are times when remortgaging is not the right option for homeowners. For example, homeowners who are currently in the middle of a mortgage deal may find that the cost of exiting the deal early counteracts any savings that can be made from remortgaging at a lower rate. Alternatively, homeowners who are planning to move home within the next year may want to reconsider remortgaging as it could result in them being locked into a mortgage deal that cannot be transferred to the new property and that will be costly to exit early. For homeowners considering remortgaging, it may be worthwhile speaking to a mortgage broker first, as they will not only be able to highlight the most competitive deals on the market, but will also be able to advise whether remortgaging is the right option for their current circumstances.