Borrowers can still remortgage and get the best rates | moneyfacts.co.uk

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Michelle Monck

Michelle Monck

Consumer Finance Expert
Published: 08/04/2020

Research by Moneyfacts.co.uk shows that borrowers that need to remortgage could be missing out on savings of thousands of pounds by not moving to a new mortgage deal. Mortgage rates are at their lowest levels following two historic Bank of England base rate cuts in March. The average two-year fixed mortgage rate has fallen from 2.43% at the end of March to 2.22% on 7 April 2020.
Borrowers planning to remortgage in the coming months may be worried about their options due to the Coronavirus pandemic. In recent weeks the mortgage market has contracted with the total number of mortgage products available reducing from 5,222 to 2,750 today. Lenders have had operational constraints as the ability to conduct physical valuations is limited and purchases cannot complete due to the Coronavirus lockdown. Lenders have also seen their contact teams under severe pressure as borrowers request mortgage payment holidays. All of this has placed constraints on lenders’ ability to process new remortgage applications, however there are signs that lenders are adjusting processes to overcome these.

The biggest lenders are moving to automated valuations

Data shared with Moneyfacts.co.uk shows the UK’s ten biggest lenders all use automated valuations on residential mortgages and eight of these will use this on remortgage applications of up to 60% loan-to-value (LTV). Those looking to remortgage at higher LTVs will have less choice available.
Automated valuations use different data sets to calculate a valuation and confidence level in that valuation for a property. Lenders have used these automated tools alongside traditional, physical valuations for several years.
Each mortgage lender will have its own rules on what they will use an automated valuation for, most restrict the maximum loan-to-value (LTV), while others may not accept properties of non-standard construction, high rise properties, flats and maisonettes. Borrowers living in shared ownership properties may also find it harder to find a new remortgage deal.
Using a mortgage broker will help those wanting to remortgage find a lender who is more likely to accept their business.

Mortgage rates are at historically low levels

The average rate of interest on fixed rate mortgages has reduced for both two- and five-year fixed deals between the beginning of March 2020 and 7 April 2020. Two-year fixes dropped by 11 basis points , while five-year fixes reduced by 24 basis points from 2.74% to 2.50%.
The most competitive remortgage rates available right now are at 60% LTV and below. A two-year fixed rate mortgage starts at 1.19%, with a five-year fixed deal at 1.41%. Those at 80% LTV can find fixed rates as low as 1.44% available over two years.
Borrowers may be surprised at the level of choice and competition still available with the top five rates available at 60% and 80% LTV only having 10 basis points between them. At 60% the rates range from 1.19% to 1.29% and at 80% LTV starting from 1.44 to 1.54%. We only included those lenders available in England and Wales and excluded multiple products from brands in the same banking group.

Now is the time to use a mortgage broker

Access to expert insight and knowledge has never been more valuable, those looking to take advantage of the potential savings in interest rates, will also benefit from the help of a mortgage adviser knows which lenders can use automated valuations and understands their current processing times.

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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. Links to third parties on this page are paid for by the third party. You can find out more about the individual products by visiting their site. Moneyfacts.co.uk will receive a small payment if you use their services after you click through to their site. All information is subject to change without notice. Please check all terms before making any decisions. This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

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