When Would Be the Right Time to Remortgage To Make the Most of Base Rate Rises?
- By Howard Ogollegos
- Published 10/2/2011
- Real Estate
- Unrated
If you are a saver than the last couple of years will have been pretty tough. However, for the millions of borrowers in the UK, record low interest rates have meant that many people have benefited from low mortgage repayments.
Considering there are many more borrowers than savers in the UK, it has been a good period for both businesses and individuals. However, interest rates may be set to rise in the near future, resulting in payment increases for millions of borrowers.
The Bank of England base rate currently sits at just half a percent, where it has been for some time due to the economic climate of recent years. However, as inflation is at its highest level in many years, the interest rates will need to be increased in order to avoid any further inflationary rises.
High street mortgage rates are, therefore, currently lower than the Base rate a decade ago. For example, the Nat West currently has a variable rate at 4 per cent, reducing to just 2.69 per cent for two years. Even though the rates offered by lenders are generally higher than the Bank of England Base rate (set by the Monetary Policy Committee (MPC)) they are still very low in historical terms.
Early in 2011, a potential rise in the base rate was discussed by the Bank of England, however it was agreed that the 0.5% base rate should be kept at the time, however it has now been confirmed that increases will be made by the end of the year.
Most financial experts expect rates to rise gradually rather than quickly. The Base rate is expected to return to a level at around 3-4 per cent over the next few years, meaning that High Street mortgage rates are likely to be available at around 6 per cent. Taking these figures into account, now may be the perfect time to remortgage.
Another compelling reason to consider switching your home loan now is that lenders seem to be gradually regaining their appetite for remortgage lending. Obtaining a mortgage over the last couple of years has been tough as banks and building societies tightened their lending criteria, but there are signs that the market is opening up once again.
According to various sources, since February 2011, there has been an increase of one fifth on remortgage lending, so it is advisable to take advantage of the increased lending before interest rates go up, so that you can make the most of the lowest deals available on the market while rates are still relatively low.
It is also perfect conditions at present to remortgage if you are thinking of doing home improvements or planning on starting your own business, as you will be getting the most for your money in the current market conditions, so your business would be able to grow more quickly than if interest rates were higher.
Over the next 12 months, we will see interest rates increasing, lenders more open to lending and hopefully a property market well on its way to recovery, so it is the ideal time to get your mortgage dealt with so that it works for you.
Considering there are many more borrowers than savers in the UK, it has been a good period for both businesses and individuals. However, interest rates may be set to rise in the near future, resulting in payment increases for millions of borrowers.
The Bank of England base rate currently sits at just half a percent, where it has been for some time due to the economic climate of recent years. However, as inflation is at its highest level in many years, the interest rates will need to be increased in order to avoid any further inflationary rises.
High street mortgage rates are, therefore, currently lower than the Base rate a decade ago. For example, the Nat West currently has a variable rate at 4 per cent, reducing to just 2.69 per cent for two years. Even though the rates offered by lenders are generally higher than the Bank of England Base rate (set by the Monetary Policy Committee (MPC)) they are still very low in historical terms.
Early in 2011, a potential rise in the base rate was discussed by the Bank of England, however it was agreed that the 0.5% base rate should be kept at the time, however it has now been confirmed that increases will be made by the end of the year.
Another compelling reason to consider switching your home loan now is that lenders seem to be gradually regaining their appetite for remortgage lending. Obtaining a mortgage over the last couple of years has been tough as banks and building societies tightened their lending criteria, but there are signs that the market is opening up once again.
According to various sources, since February 2011, there has been an increase of one fifth on remortgage lending, so it is advisable to take advantage of the increased lending before interest rates go up, so that you can make the most of the lowest deals available on the market while rates are still relatively low.
It is also perfect conditions at present to remortgage if you are thinking of doing home improvements or planning on starting your own business, as you will be getting the most for your money in the current market conditions, so your business would be able to grow more quickly than if interest rates were higher.
Over the next 12 months, we will see interest rates increasing, lenders more open to lending and hopefully a property market well on its way to recovery, so it is the ideal time to get your mortgage dealt with so that it works for you.
Howard Ogollegos
Howard O'Gollegos writes for Just Commercial Mortgages.com the UK's No.1 site for the latest commercial mortgage rates and commercial property finance news.
View all articles by Howard Ogollegos