Remortgage customers have recently been able to benefit from some of the lowest rates ever seen, yet new research from moneyfacts.co.uk shows that time may be up for these competitive deals – which means if you've been thinking about remortgaging, now may be the time to take the plunge, before rates have the chance to rise any further.
As the table below shows, the rates available to those remortgaging have crept up in the past six months, particularly in the two-year sector, with the average two-year fixed rate for those remortgaging now higher than it was a year ago.
|Remortgage Products||A Year Ago||6 Months Ago||Today|
|Two-Year Fixed Rate Average||2.56%||2.44%||2.58%|
|Five-Year Fixed Rate Average||3.32%||2.96%||2.98%|
"The fact that some rates are starting to creep up for remortgagors is unwelcome news for those borrowers who have yet to capitalise on the heightened competition that has caused low rates to appear in the market," said Charlotte Nelson, finance expert at moneyfacts.co.uk.
"Rates have been on a downward trajectory for such a time that it has almost become the new norm, so those looking to remortgage today may be shocked to see that some rates have witnessed a 0.14% increase in just six months."
Calculations show that the average two-year fixed rate will cost borrowers £14.11 a month more compared with six months ago (based on a £200,000 mortgage over a 25-year term on a repayment-only basis), or an extra £169.32 a year – and with talk of a base rate rise on the horizon, there is no telling by how much more this could potentially rise.
"The uncertainty in the economy, combined with base rate speculation, has driven providers to rethink their offerings and react accordingly," explained Charlotte. "While the lowest rates in the market remain for the time being, lenders have started to tinker with those products that are not in the spotlight."
It isn't only lenders who are starting to consider their options, either. Given all the talk surrounding base rate, borrowers have also started to take a closer look at their finances and what would happen should base rate edge up; an estimated £35bn worth of mortgages will reach maturity this autumn, which means a large chunk of borrowers could be facing an increase in rates, so swift action could be required.
However, even though remortgage rates have begun to edge up, "borrowers should not be put off from remortgaging, as there are still savings to be made," said Charlotte. "This is particularly true as the average SVR currently stands at 4.60%. And of course, the rate is not the only cost for borrowers to consider; they'll want to be on the lookout for decent incentives, and should regularly check in on the Best Buys to see what is out there."
It's important to remember that averages are just that, which means it's still possible to find far cheaper deals on an individual basis. Compare the best remortgage rates to see for yourself.
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.