Have you been considering a remortgage for your property? How much you have to pay back will depend on whether you act now or wait a few months. Research shows that remortgage rates are slowly rising in the UK. Let’s look at what that means for homeowners.
Rates Are Currently Low but Not for Long
Six months ago, remortgage customers were benefitting from rates lower than we have seen in years. However, research published recently by Moneyfacts.co.uk shows that two-year fixed rate remortgage rates have crept up from 2.44 per cent six months ago to 2.58 per cent today. This new rate is also higher than it was a year ago when it was 2.56 per cent.
If you have a mortgage of £200,000 on a repayment-only basis over a 25-year term, then you would have an extra monthly payment of £14.11 thanks to the recent uptick. This works out to an added yearly payment of £169.32. And, there is no way to know how much this could rise as there is already talk of more increases.
Lenders are rethinking their offerings and making changes due to the base rate speculation as well as uncertainties about the economy in the wake of Brexit. Providers have begun to tinker with their less popular products while the rates continue to remain somewhat low. But, it appears the downward trajectory is over.
Borrowers Should Not Delay Remortgaging
Providers of remortgage loans are not the only ones looking at the alternatives available to them. Borrowers are beginning to look closer at their finances and what the repercussions would be with an increased base rate. This autumn, approximately £35bn in mortgages will reach their maturity. Swift action may be in order as a large chunk of borrowers face rate increases. Some may choose to draw down and release equity from their homes at the same time as remortgaging in order to come up with the cash for home improvements or even to start a new venture.
You should not be turned off from remortgaging even with the impending rate hike. The rates are still near their all-time lows, and there is still savings to be made. For instance, the standard variable rate (SVR) currently sits at 4.6 per cent. And, in addition to interest rates, you will also want to see what incentives are out there. Plus, the rates we quote in this article are averages, which means there are lower rates and higher rates to be found. You just need to shop around to find the best deal for your needs. If you put in the extra time, you can save thousands over the course of your loan.