Is now the right time to remortgage?
With the Bank of England Base Rate currently resting at a 15 year high of 5% many people are asking whether it is now the right time to remortgage. Or should they hold off in case the mortgage market improves. Adam Nanson, Managing Director at Your Mortgage Expert takes an overview of the remortgage market right now:
What is happening with mortgage rates?
“It has been incredibly difficult to predict what is happening with the mortgage market over the last six months. We think we know what the trends are going to be and then things change with a new prime minister or inflation not behaving as expected.
“The current mortgage market situation is that the Bank of England increased the base rate for the 13th time in a row on 22nd June. The result is that mortgage rates are currently at their highest level since December 2022. With the average rate for a two-year fixed-rate mortgage now at 6.51% according to the financial information service Moneyfacts*.
“Most financial experts are now predicting that mortgage rates are going to continue to rise and for us to be in a mortgage crunch for the next 12 months**.”
So, is now the right time to remortgage?
“Whether now is the time to remortgage depends on your personal situation. If your mortgage deal is coming to an end, we would advise you speak to your mortgage broker about your options. We don’t know for certain in which direction interest rates will go. But the worst thing you can do is do nothing. As the most expensive option generally will be for you to go onto your lender’s standard variable rate. And this will happen if you don’t switch to a new deal.
“Once of the things my clients often tell me is that they value fixed term deals because it gives them security of knowing how much they will pay each month. And, fixed term rates tend to be lower than your lender’s standard variable rate. So, even though rates are high currently, with a fixed term deal, you know how much you will pay regardless of whether rates continue to rise as is predicted.
“However, there are other options such as more flexible arrangements which you might want to consider if you don’t want to commit to a fixed term arrangement right now. And, many of my clients have been considering variable rate mortgages and we can talk about the pros and cons of those types of mortgages as well.
“If you are within six months of your current deal coming to an end, we would advise you to contact your mortgage adviser to discuss your options. We can start looking at options now and help you lock in a rate now in case they do go up over the next six months.”
To speak to a member of the mortgage advice team about your mortgage ring us now on 01722 322683. Or complete a contact us form and let them know when we can call you back.
The information contained within this article was correct at the time of publication. It is intended for information only and should not be used as a basis for purchasing any products. We cannot be held responsible for something that was correct at the time but subsequently changes or goes out of date. For further information, contact Your Mortgage Expert on 01722 322683.
*source: https://moneyfactscompare.co.uk/news/mortgages/best-uk-residential-mortgage-rates-this-week/
**source: https://www.resolutionfoundation.org/publications/the-mortgage-crunch/