Record low mortgage rates have led to a surge in the number of borrowers remortgaging. Figures from UK Finance reveal that the number of people remortgaging in July was up 10 per cent on the same month last year as lenders slashed their pricing and borrowers took advantage of these cheap deals.
While summer was busy on the remortgaging front, the autumn is set to see even more activity. Some £35bn worth of mortgages are due to mature by the end of October, meaning thousands of borrowers will be coming to the end of their fixed rate or discounted tracker period. If these borrowers don’t remortgage onto another fixed rate or base-rate tracker, they will automatically move onto their lender’s often much higher standard variable rate, meaning a significant jump in mortgage payments.
With the cost of living continuing to rise, making savings where you can makes a lot of sense and nobody wants to pay more than they need to on their mortgage. The good news for borrowers is that lenders competing for business have the remortgage market in their sights, as the house purchase market remains subdued. One lender cut its two- and five-year fixed rates to 1.39 per cent and 1.79 per cent respectively this week for those with a 40 per cent deposit – and that’s without a fee as well. Other lenders are offering even cheaper rates with two-year fixes available from 1.03 per cent and five-year fixes from 1.59 per cent.
It is also worth self-employed applicants noting that from October lenders will require a 2017 SA302 (issued to those who file a paper tax return) to support new lending, whereas they are currently accepting 2016 figures. Borrowers may wish to seek advice as to whether they are better off applying for funding now or waiting until October.
While affordability criteria are tougher than in the past, thanks to the fallout from the credit crunch and subsequent introduction of the Mortgage Market Review, it would be wrong for borrowers to assume that it will be impossible to remortgage. There are options available for most and we can point you in the right direction.