With November's base rate increase seeing most lenders raise rates by 0.25% or more, borrowers' motivation to remortgage to a more secure deal has reached its highest level since the financial crisis, LMS' Remortgage Report reveals.
Luckily for remortgagors, the number of available deals has also seen an increase, rising 41% from December 2016 to December 2017 to sit at 39,943. This is especially good news for those on tracker or variable rate mortgage deals, as these have been particularly impacted by base rate.
The best way to protect against the impact of future increases to base rate on mortgage rates is to fix your mortgage rate for the long-term, as Nick Chadbourne of LMS points out: "While variable rate products are versatile and provide a level of flexibility that might have appealed to borrowers when the base rate was falling, in the current climate of rising rates, the security offered by fixed rate products is the natural choice for many. Borrowers have been primed to expect a higher cost of borrowing and they are opting to secure their position and eliminate risk where possible."
Additional figures reflect this, as demand for variable rate products has fallen to just 2% of the remortgage market in December, down from 9% a year earlier. Meanwhile, demand for five-year fixed rate mortgages has doubled, going from 23% in December 2016 to making up 46% of recent remortgages.
Two-year fixed remortgage deals have recently gotten more popular as well, rising from a low of 20% of remortgages in October to 23% in November and December following the base rate rise. And these fixed products are likely to remain popular, as 82% of borrowers now expect another base rate rise sooner rather than later.
The mortgage market itself also seems to be pricing in the next base rate rise, with predictions pointing to another increase in May, followed by at least two more over the next three years. So, anyone considering remortgaging might want to move to a fixed rate mortgage deal before the Bank of England can increase base rate again.
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