Motivation to Remortgage Highest Since 2008
Mortgage rates may be showing signs of rising, but that shouldn't dampen borrowers' desire to remortgage, particularly those coming to the end of a fixed two-year term. Indeed, our latest figures show that motivation to remortgage has hit its highest level since 2008, and by all accounts, it's only going to increase in the months ahead.
That's because the difference between the average standard variable rate (SVR) and the average mortgage rate of two years ago is on the rise, and has now hit its highest level in over eight years. This suggests that motivation to remortgage is now the strongest it's been since the financial crisis, for the simple reason that borrowers are now faced with the choice of remortgaging to a lower rate, or reverting to their lender's higher SVR. It's a no-brainer.
After all, the average SVR currently stands at 4.56%, while the average two-year fixed mortgage rate in February 2015 was 3.14%. This means borrowers coming to the end of that deal would now see a rate increase of 1.42% if they reverted to the typical SVR - the highest jump since November 2008, when the difference stood at 1.57% - which could have a significant impact on their mortgage repayments.
Conversely, if they remortgage to today's average two-year fixed mortgage rate of 2.33%, they could enjoy a rate reduction of 0.81%, which has the potential to reduce their outgoings, rather than increase them. These are just averages, too; with our mortgage Best Buys showcasing fixed rates as low as 1.34%, you could save even more.
This trend is set to continue, as the effects of recent years' rate cuts gain momentum: mortgage rates have been falling consistently over the last two years, so unless the current SVR drops dramatically, the difference between the two is only going to rise, further encouraging remortgaging activity.