Remortgages soar as borrowers ‘clean up’ finances
Hamptons ’ Best Buy Mortgage Tracker revealed the proportion of borrowers remortgaging in February rose to 30 per cent from 17 per cent in January. It attributed this rise to attractive rates coupled with a stable Bank of England Base Rate.
Jonathan Cornell, director at Hamptons International Mortgages, said: “This month we have seen a marked increase in the proportion of borrowers remortgaging. At the same time, the popularity of two-year fixed rate deals relative to other mortgage offerings has also increased significantly. The attractive deals on offer mean that the possible interest savings, which stand at £1,561 for the first year alone, are perceived to be higher than those with discounted variable rate deals. As a result, borrowers are flocking to take advantage of the savings and spring-clean their finances, following a debt-burdened Christmas.”
The research also revealed a rise in fixed rate activity as a result of lenders adapting their rates, while two-year variable rates fell as a result of a rise in lenders’ upfront fees. The average exit fee fell to £205.
Cornell added: “Borrowers have recognised that, with a Base Rate cut looking less likely, the fixed rates that are currently on offer are generally more competitive and offer better value than the discounted ones.”
Commenting on the figures, Harry Katz, principal at Norwest Consultants said: “I am not at all surprised at this and can foresee even greater remortgage activity. The public has stretched itself to breaking point with debt, mortgage and non-mortgage, with many taking out equity just to ‘splurge’. Remortgaging is a way to assist immediate cash flow problems and it would be interesting to see what the lending rate saving is and whether the term of the loan is being increased. In many cases it may be both.”