One of the risky moments for a homeowner is when their current mortgage deal ends.  They have the option to either remortgage and get a new interest rate and term or they can choose to not remortgage.  If they do not then they are converted to their lender’s standard variable rate (SVR) which is considered a high risk interest rate to pay.  The SVR can rise or fall at the whim of the lender and is not based on the Bank of England’s Monetary Policy Committee’s (MPC) standard base rate.  If the lender is facing higher costs to fund lending then they can and usually do raise the interest rate on their SVR customers.  Since the notice to customers is usually short before an increase the SVR is considered risky for homeowners that are on a budget and must plan ahead for increases to their mortgage repayments.

Since many of the lenders recently announced and increased their SVR it was thought that more homeowners would be looking for remortgages.  Current remortgages are attractive and many have low interest rates on fixed deals and there are long terms available which would provide security against future increases from the MPC and escape from the risky SVR of their lender.

Yet homeowners are not looking to remortgage as would be expected or at least that is what the August data on remortgage lending revealed.  The latest data from LMS reported that August remortgaging was at the lowest proportion of total gross mortgage lending since 1999.  August gross remortgaging was just 25% of total gross mortgage lending at £3.17 billion.

Andy Knee, LMS chief executive remarked, “In August, we saw a significant uplift in new business and this is now beginning to flow through into completions. Therefore, September and October are expected to be much stronger months for remortgage lending as customers complete their switches to one of the numerous long-term fix rates at below 3 per cent.”