What is happening to the mortgage market?
The Bank of England base rate has surged to 5.25% over the past year to try and stem rampant inflation. This has caused the average interest rate to increase dramatically. However, since the end of May, there has been a downward trend in the average interest rates, which is good news for homeowners.
Should I stay with my current lender or remortgage elsewhere?
This really depends on your personal circumstances and what your current lender is offering. There could be a better deal elsewhere so it is worth researching the market. However, unlike a product transfer with your current lender, a remortgage requires a new full application.
Can I change to interest only or extend my term?
Many lenders have signed the Mortgage Charter, which allows existing customers to switch to interest only or extend their terms to help manage their monthly mortgage payments. If your lender doesn't offer this, you may be able to switch lenders.
Should I revert to my lender’s Standard Variable Rate (SVR) and wait for things to improve?
We do not typically recommend this as you could be waiting for many months or years for things to improve. The SVR is usually much higher than the products being offered by your lender. If you expect rates to go down, it is a better plan to take out a variable rate, instead of a fixed rate.
Should I fix a new deal before the end of my current deal? What happens if the rate goes down?
Normally the window to change your product opens 6 months before expiry. As the new interest rate is almost certainly going to be higher, you won't transfer until the expiry date. If the rate goes down over the 6-month period, it is usually possible to transfer to the lower rate, depending on your lender's criteria. Your mortgage broker will automatically notify you of this.
Is it better to have a two or five-year fixed rate?
Based on data from Chatham Financial (a tool used by lenders to forecast future rates), it is expected rates will decline over the coming years. Whether a 2 or 5-year fixed is better for you depends on your circumstances. Speak to your advisor.
Should I speak directly to my lender or speak to my broker?
Your lender has a self-interest of keeping you as a customer, your broker will assess the market to find better options.
Your lender doesn't usually notify you of rates reducing, your broker has internal software that monitors your interest and will switch you automatically.
Your lender doesn't understand your personal circumstances and can't determine what is best for you, your broker can.