Recently we have heard talk, and indeed seen evidence, that some lenders are starting to target the remortgage markets once more, perhaps a little earlier than many would have expected.
This is of course good news for mortgage brokers and borrowers alike, after all more choice and more competition is what is badly needed.
The issues for many is whether they should fix now or enjoy a low variable rate tracker.
There has been so much contradictory economic data and press speculation in recent months, culminating in recent data showing that the UK economy grew more than expected in the last quarter, leading to renewed claims that interest rates may rise quicker than many first expected.
On the other hand this has been dampened by reports of a predicted fall in economic activity and house prices as the recent Government cuts start to bite. Even on the Bank of England’s’ Monetary Policy Committee itself we have two individuals at either extreme, one calling for immediate interest rate rises and the other for an increase in the Quantitative Easing campaign.
Trying to predict when rates will move is a dangerous game and for many now is the time to sensibly review their options and levels of affordability should rates increase by 1% or even 2% in the next year or so.
Throw in the fact that fixed rates have come down to very attractive levels, house prices are expected to ease further, (meaning that those looking to remortgage may fall into a more expensive interest rate band), and lenders have tightened their loan criteria, it could be that the time to take action is now.
After all, there are now some excellent choices whatever your individual views on interest rates are; trackers under 2%, five year fixes below 3.7% and products that allow you to enjoy a low tracker now and switch to a fix without penalty at any time. All with free valuation and legal’s for remortgages.
Don’t get me wrong this is all great, and will help many especially around areas like London, but the reality is it is still representative of the mainstream lenders battling it out in the low-loan-to-value arena, around 70% and below. In order to really help around the country as a whole however, there has to be more innovation in the higher LTV bracket, nothing stupid, just up to 90% LTV.
In other words helping those most at risk to rising rates from becoming mortgage prisoners.
It is a positive start, but there is much more to be done.