The year of the remortgage
Posted on 11 February 2015
So as we enter the second month of the new year already it’s interesting to see how things in 2015 are shaping up already.
As many of us thought, it’s been a mixed start to the new year, nay cautious even, as although enquiry levels are high, it’s clear that this year home buyers are looking for good value for money, and are no longer willing to pay whatever it takes to get their foot on the ladder, or make that next move, despite any savings they can make in stamp duty.
Conversely, as the price of lending continues to fall, 2015 could actually be the year of the remortgage as it seems there’s never been a better time to grab a long term fixed rate. Rates as low as 2.35% for 5 Years have never been seen before, and the 10 year rates seem to be attracting more attention (It’s just a shame about the ERC’s). Even some of term variable rates are looking excellent value with ERC deals starting at 1.89%.
There’s been a lot of discussion regarding “mortgage prisoners”, those borrowers unable to remortgage due to the myriad changes in lending criteria since they took their original loan out, being one of the main reason s that remortgages have been subdued over the past year.
Certainly the current keen levels of pricing should be driving anyone on a Standard Variable Rate down the route of remortgaging, however we wonder how many of those borrowers stuck on SVR, have been rejected by the high street, but are unaware of the alternative options that may be available to them via a mortgage broker.
On the statistics front, there has been a number of surveys indicating an ongoing cooling in the housing market. On the 29th January 2015HMRC reported that although home sales for 2014 were up 14% on 2013, it’s being forecast that there may be a slight drop in 2015. Nationwide has also reported more evidence of a slowdown in the market, saying that the annual rate of growth slowed to 6.8%, while the Land Registry said that property price growth in December came down to 7% from 7.2% in November. The British Bankers Association also said that lending in December had been down again year-on-year, for both purchase and remortgages. Many housing industry commentators are expecting the market to remain subdued until after the election, at which point the stamp duty changes announced in December last year, may start to have an effect.
Meanwhile, out in the economy, the ONS revealed that the economy grew at 2.6% for 2014 as a whole, though Inflation fell sharply in December to stand at 0.5%, with further falls likely over the next few months, which combined with subdued wage growth is going to strengthen the case for keeping interest rates lower for longer.
Over in Europe, the eurozone has fallen into deflation, the ECB has announced a massive injection to the economy, while the election of the anti-austerity government in Greece has rather overshadowed the political campaigning in the UK. It will be very intriguing to see how these issues develop, over the next few months.
All in all it’s a bit of a mixed outlook, but the good news for borrowers is that there still some good deals to be had, especially for those looking to remortgage.
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