For the first quarter of the year £17.5bn was spent on remortgages in the UK, compared to £29.5bn at the same point in 2022, the Financial Conduct Authority found.
Fewer people were making the switch to a new mortgage deal. According to the Building Societies Association (BSA), 253,782 people took up remortgage products at cost of around £51bn, up to August 2023.
This is down from over half a million (539,591) sold in the UK to the tune of £113bn, during the whole of last year.
Base rate paused at 5.25% – for now
A major issue borrowers have had to consider when finding a new deal for their property was the fourteen consecutive months of base rate hikes implemented by the Bank of England (B of E), which came to an end in September.
The current base rate stands at 5.25% and in June 2023 the average two-year rate for a 75% loan to value (LTV) mortgage was 5.5% – a rise from 2.87% the previous year.
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Comparison site Confused.com looked into the plummeting remortgaging numbers and has issued advice on what homeowners should consider when finding a new deal.
Remortgaging considerations for homeowners
Why would I remortgage my property?
There are various reasons for remortgaging: To take advantage of a lower interest rate; to fix your mortgage rate for a certain period; to release equity from your home; to consolidate debts; or to switch from an interest-only to a repayment mortgage
When is a good time to remortgage?
It’s often beneficial to start looking at remortgage options a few months before your current mortgage deal ends. This will give you sufficient time to find a suitable offer and complete the application process. It’s also wise to keep an eye on interest rates and the property market.
Are there fees involved?
Yes. These can include early repayment charges from your current lender, valuation fees, legal fees, and/or arrangement fees for the new mortgage. It’s important to calculate whether the overall savings outweigh these costs.
Can I remortgage if I have poor credit?
Remortgaging with poor credit can be more challenging, but it’s not impossible. There are specialist lenders who cater to those with less-than-perfect credit histories. However, the rates may not be as competitive.
How long does the process take?
The remortgaging process can take anywhere from four to eight weeks, depending on the complexity of the application and whether any issues arise during the valuation or legal stages.
Can I remortgage to buy another property?
Yes, you can remortgage to release equity from your existing property for the purpose of buying another property, often referred to as a ‘let-to-buy’ mortgage.
Should I use a broker?
A mortgage broker can provide valuable advice tailored to your circumstances and help you navigate the range of available mortgage products. However, this service usually comes at a cost, either through fees or commission.