Why this is the Best Time in Years to Remortgage

11-Jun-2010

Think back to April last year.  We were in the midst of a worldwide recession, and the Council of Mortgage Lenders estimated that almost a million mortgage accounts were in negative equity.  Mortgage adviser John Charcol estimated that a further 1.5 million only had equity totaling 15%.  All things considered, only a quarter of all UK mortgage holders would have been in a position to remortgage last year.

Why the Standard Variable Rate worked for some

Sitting on a Standard Variable Rate (SVR) mortgage rate - the lender's 'default' interest rate - actually worked out quite well for some people.  The SVR is usually set as a few percentage points above the Bank of England base rate. Due to the historically low base rate in recent years, many lenders' SVR rates were actually therefore lower than some of their new mortgage deals, and so 'sitting tight' was not a huge hardship.

The end of the SVR party

Now that situation is changing.  Some lenders like Halifax and the Skipton Building Society were able to renegotiate their SVRs with their customers due to clauses in their terms and conditions, leading to higher rates (and some disgruntled customers).  Other lenders, although they are contractually obliged to honour the lower SVR for existing mortgages, have introduced a new SVR for all new mortgage contracts.

Why now is a good time to Remortgage

According to figures from adviser John Charcol, 16 lenders have increased their Standard Variable Rate since the base rate fell to 0.5%, and 2 have increased their SVR in the last month.  No lenders have cut their SVR in almost a year, and it's unlikely that any now will. Meanwhile, fixed rate mortgages are currently at their cheapest levels since 2003. 

House prices are now back to within 9.1% of their original levels, according to Nationwide, and higher loan-to-value lending is now firmly back on the menu. As more good news, if you have been on your lender's SVR, you'll not have any early repayment charges to pay if you remortgage.

Should you be looking around?

If you have good credit and you don't need to self-certify your income, you could be in a good position to improve on your current mortgage deal.  John Charcol estimates that in addition to the above criteria, if you are paying a standard variable rate of 3.5% or more, and you have a loan to value of up to 85%, there is likely to be a product in the market that will save you some money on your monthly repayments.  If you can't prove your income or if you have adverse credit, you probably shouldn't consider moving at the moment, but it may still be worth talking to a mortgage adviser to discuss your options.

Request a callback from a remortgage adviser today.