Lowest fixed mortgage rates in a decade!
If your mortgage term has ended then low fixed rates offer an opportunity to ensure your mortgage rates stay low when the base rate begins to rise.
In the past, coming to the end of your mortgage term was a scary prospect as lenders Standard Variable Rates (SVR) often meant a sharp increase in your monthly repayments. The emphasis has always been on searching for a better rate to remortgage to in a bid to save you from a hefty rate hike.
However, with the lowest Bank of England base rate in over 300 years, many lender SVRs are actually lower than the fixed rates that we arranged for Contractors 2 years ago when they last remortgage. This means that coming to the end of your mortgage term is actually something to rejoice rather than something to dread.
Sitting pretty or missing out?
Whilst it is all to easy to stay on your lenders SVR and feel content in the knowledge that you are saving money on your repayments, you could be missing a trick. With interest rates at an all time low, fixed rates that lenders are currently offering are the lowest they have been in a decade.
If you can remortgage now to one of these low fixed rates then you can guarantee your low repayments for the duration of your new mortgage term. With industry professionals speculating that the base rate may begin to rise, transferring to a low fixed rate mortgage could pay dividends in the long term. In this case, acting quickly is key as fixed rates tend to rise before the actual base rate.increased. This means that the deals that are as low as 2.99% at the moment are only available for a limited period so it's a 'buy now while stocks last' situation.
Don't play the waiting game too long
Whilst it might seem tempting to stick to your lenders SVR it could quickly result in rising repayments and a lack of competitive fixed rate options when you do decide to switch. Recent research by Alliance and Leicester revealed that 81% of mortgage owners that are currently on their lenders SVR have no immediate plans to remortgage to a better rate, whilst 14% are waiting for interest rates to rise before looking for a better deal.
It is crucial that Contractors realise that waiting for interest rates to rise will mean missing out on the best fixed rates as by definition they will rise ahead of base rate because lenders use forward modelling to price their products. It could be beneficial to at least enquire about the fixed rates that are available to you before making a decision to stick with your lenders SVR. You never know how much money you could save by switching and long term this could become even more apparent.
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