Remortgage Boat Might Have Sailed When SVRs Rise
23 March 2010 / by Rachael Stiles
A record number of homeowners are currently on their mortgage lender’s standard variable rate, but they might miss the ‘remortgage boat’ if they wait on it too long and rates start to rise, Unbiased.co.uk has warned.
The advice website urges homeowners to consider comparing remortgage deals now so they know what is available, rather than waiting until interest rates start to rise from their record low of 0.5 per cent and have a knock-on effect on mortgage rates.
At the end of 2009, almost a third (31 per cent) of homeowners were on a standard variable rate mortgage, a marked increase from 23 per cent in January 2009.
Part of the reason for this is that homeowners’ expectations have changed; Unbiased’s research shows, for example, the average fixed rate mortgage deal that homeowners would settle for has dropped from four per cent in January 2009 to 3.3 per cent, so they are sticking with an SVR until the right rate comes along.
Fixed rates have come down, but waiting too long could be dangerous, Unbiased explains, because they run the risk of interest rates starting to rise, which they are widely expected to do in 2010.
When asked about their current mortgage situation, 29 per cent of homeowners said they are on their lender’s SVR and have no plans to change this, up from 25 per cent in May 2009, while they make the most of SVR rates which are lower than fixed or tracker mortgage rates.
Commenting on the findings, Karen Barrett, chief executive of Unbiased.co.uk said, “with the number of mortgage deals slowly increasing homeowners need to make sure they aren’t missing out on getting the best deals before the base rate starts to rise again, especially when in recent weeks some providers have been changing the SVR on their mortgages meaning not all of them are now as competitive as they once were.”
She continued: “It can be very confusing for homeowners to keep track of which is the best mortgage for them and when is the best time for them to move onto a new deal. In the past, staying on your lender’s SVR was financially crippling, and while this has certainly changed, homeowners need to stay alert and active to ensure they don’t miss the best deals and see their monthly payments rocket.”
Ms Barrett suggests that homeowners seek mortgage advice from a whole of market adviser or mortgage broker to ensure they switch at the right time and get the best deal for their circumstances.
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