Homeowners act now to secure the best remortgage deal!

Published: 13/07/2011

As June’s Mortgage Market Review came and went without an increase of the historically low interest rate, homeowners have once again pushed the idea of remortgaging to the back of their minds.

The problem? A severe lack of urgency. Whilst the Bank of England’s interest rate remains at 0.5 per cent with no hint of a rise, and with it higher mortgage payments, homeowners will continue to plod along with what they’ve got.

By nature, we are not the most proactive bunch; there is enough going on in our lives without having to focus on something that, at first glance, does not come with a coat of urgency.

Education

It’s physics at its most basic: what goes up must come down. The same theory – albeit in reverse - must be applied to the current interest rate.

Interest rates have remained unchanged for over two years; there is no chance of them decreasing any further. This leaves only one outcome - an increase, and when it inevitably does, there will be the predictable stampede of homeowners looking to lock in a low-rate remortgage deal.

However, as soon as interest rates start to creep up, advantage will be handed back to the lenders.

Currently, lenders are dangling the tastiest of carrots to entice homeowners into playing the remortgage game. “Incentives are better, rates are better, and even lending criteria is better. Easing of lending restrictions have opened up a better possibility for remortgage approvals.”¹

But once the tables have turned and homeowners need to remortgage, these great rates may no longer be available. Homeowners need to realise now is the time to seize the best deals. Abbey for Intermediaries kick started the battle, releasing some excellent two-year deals (1.99 per cent tracker and 2.89 per cent fixed). These deals were only on offer for seven days but it demonstrates just how good a deal a homeowner could be snapping up. Abbey have since launched another limited time offer - 3.35 per cent fixed rate for two years. While still a good rate, it isn’t as competitive as its previous rates. Does this suggest the tide has already begun to turn?

Source
¹Remortgage.com (July 2011)

Content correct at time of publication