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There are signs that competition is returning to the remortgage market – and that spells good news for borrowers. For the first time since the credit crunch, lenders are vying to tempt homeowners away from existing loan deals with new products.
For many borrowers, sitting on their lender’s standard variable rate has seemed like the safe option. Now, the fixed-rate and tracker deals being offered by some lenders are providing an alternative which could prove highly attractive.
Mortgage borrowers could enjoy current low interest rates for many months to come, according to a leading think tank. The Centre for Economics and Business Research (CEBR) reckons that rates could stay on hold until late in 2012.
Analysts have long suggested that the only direction of travel for interest rates is up – but the CEBR argues that conditions now mean that any such move will come later, rather than sooner.
Their reasoning is that, with pressure from spending cuts and tax rises, the Bank of England will keep its base rate on hold, and print more money, to keep the economy growing. Along with a number of other recent forecasters, the CEBR calculates the odds are stacked against the much-talked-of ‘double dip’ recession.
Meanwhile, lenders are continuing to offer some highly competitive rates in an effort to attract customers reluctant to commit themselves in the wake of uncertainty about the housing market and economy. Indeed, some lenders have signalled cuts in rates in recent days. For those who take all economic forecasts with a pinch of salt, fixed-rate mortgage and remortgage deals offer a measure of protection against rate rises, should the economy warm up faster than expected.
Recent figures show a mortgage market facing tough challenges. Yet opportunities remain for borrowers. While the number of new loans for house purchase fell in August, remortgaging held its own, with the number of approvals rising from 27,250 to 28,042, according to the Bank of England.
In its latest Credit Conditions Survey, the Bank also warned that cautious lenders were likely to tighten their loan criteria in the months ahead. Analysts explained that lenders were mindful of current economic uncertainty, and risks to employment, along with downward pressure on property prices.
However, continued low mortgage-interest rates mean that attractive deals remain available. On the heels of the Bank of England’s Survey came the news that some lenders are actually cutting rates. And as the Bank’s figures show, remortgaging remains a practical option for many. Credit card borrowing continues to grow, according to the Bank’s figures. But with average credit card interest rates reportedly running as high as 17% or 18%, it’s worth investigating the possibility of combining such debts with your mortgage – and keeping your monthly outgoings to a minimum.
In today’s challenging climate, and given the different policies and attitudes of lenders, a reputable broker such as Go Remortgage can be of great help in researching and presenting viable options for remortgaging your home.
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The comments expressed in this section are those of the authors and should not be relied upon.
GoRemortgage.co.uk is a trading style of Green Money Limited which is authorised and regulated by the Financial Services Authority for regulated mortgages and non-investment insurance contracts. FSA Number 482743. Think carefully before securing debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. The overall cost for comparison is estimated to be 5.01% APR. Subject to circumstance, a completion fee may be payable, typically 2%.
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