On the 13th of March the Chancellor Philip Hammond gave his Spring Statement and as expected it really was just an update on how things are going with no actual policy announcements.
He did however state that he expects inflation to come back within the 2% target level over the next 12 months, this will surely relieve the pressure on the Bank of England to increase rates.
However, with the economy growing slightly more than predicted it still looks like a rate rise will come this year. This was in fact the opinion from the majority of lenders at a recent mortgage forum that I attended last week, they believe along with many economists that a rate rise is likely in May. If nothing else, another small change will give more room for maneuver if Brexit negotiations don’t go as planned and there is a need to reduce interest rates in the future
It is no surprise that, according to UK Finance, remortgage activity hit a 9-month high in January as more and more borrowers look at their options and are keen to lock in to some of the competitive rates still on offer and avoid potential increases in monthly payments.
The difficulty is that rate changes are happening quickly with neither rhyme nor reason. Each week there are some that rise and some that are cut as lenders play off against each other in a bid to achieve top on Best Buy tables to target certain areas where they want to do business. Keeping up to date can be a full-time job, (which is exactly what we do!).
With this in mind, it makes sense for anyone looking to remortgage to start researching the market between 4 to 6 months before the end of your product. Your lender will, or at least should, write to you around 4 months before to tell you what they can offer if you stay with them, so it is a perfect time to compare the market against this.
What is also important at this stage, is to think about your requirements going forward rather than just switching to a new deal. For example, it may be a great opportunity to reduce the term of the mortgage and save thousands of pounds on interest over the full term of the loan. As rates are low, it may be that you can now afford a 20-year term rather than say a 25year term, or if you have savings, using these in an offset account could also help reduce your payments or the term of the loan.
It could be an opportunity to borrow more in order to do that extension or put in your dream open plan kitchen.
Whatever your mortgage position may be, comparing the rate your lender has offered against 10,000 different products from over 80 different lenders that we have available can only make sense.
To discuss your mortgage options in full please contact our specialist Mortgage and protection Advisors on 02890 450550.