After the Bank of England base rate rise at the end of last year, the market has been poised for the next raft of rises, with experts predicting as many as three base rate hikes this year and warning borrowers to find the best deals now.
Reports suggest that the frequent warnings being issued to homeowners about anticipated mortgage rate rises have been heard. January saw 49,800 new homeowner mortgages completed, according to data from UK Finance, the highest number since November 2008. Mirroring the residential market, buy-to-let remortgages also saw an increase of 17.9% year on year to 16,500.
Director of mortgages at UK Finance, Jackie Bennett, said: “While an increase in remortgaging is expected…as people put their household finances in order, this strong growth is above the seasonal fluctuations we tend to see at this time of year.”
Calls for borrowers coming to the end of their fixed rates to find a new deal, ahead of further interest rate rises, have been acted upon according to January figures. They show a significant increase in the monthly value of borrowing of 20.3% (up to £8.9bn) when compared with the previous year.
Early repayment charges might not be an obstacle to remortgaging
Borrowers who think they are stuck, as they are tied into their current mortgage deal for a few more months, are still encouraged to look at their options even if they have to pay an early repayment charge (ERC). It is almost certain that rates will have dropped significantly since their existing mortgage deals were taken out; so, it is likely that moving to a significantly lower rate (e.g. from 3.84% to 1.85%) would save them money even after the ERC is paid off.
Remortgage market booming
The steady rise of standard variable rates has undoubtedly encouraged borrowers to move swiftly as their mortgage terms come to an end, rather than see their monthly repayments increase considerably. Coupled with the potential interest rate rises expected this year, it is unsurprising that the remortgage market is booming at the moment, with more people switching mortgages than at almost any time in the past 10 years.
