There are moments when things come together and fit nicely to reveal a pleasing picture such as when one is doing a puzzle. Now the pieces are coming together in the economy to signal a picture revealing it is an exciting time for homeowners to remortgage. Lenders are dropping their offered rates, they are opening up their best interest rate remortgages to more qualifying homeowners, and home buyers are busy in the housing market pushing up property values and therefore giving homeowners better loan to value or LTV ratios which puts them in reach of better low interest rate deals.

The need for a remortgage is most often when a homeowner comes to the end of their mortgage term. Their previous deal will end leaving them with the option to remortgage to a new deal or allow their lender to transition them to their standard variable rate or SVR. Experts encourage, and do so rather strongly, to avoid a SVR as it could have the homeowner paying more than necessary. A remortgage could offer substantial savings. 

In recent weeks, the average SVR interest rate has been almost double the average remortgage rate. By avoiding a SVR and choosing a remortgage, the homeowner not only has a choice in the rate, which is likely much lower, but also the term of the deal and the kind of loan they want such as fixed or tracker loan.

It can be tricky business trying to forecast when to remortgage or when not to, many homeowners miss out trying to wait for the ideal time to remortgage, and they end up sitting longer on a SVR awaiting a rate reduction that in real terms saved them little compared to the amount of money they spent out on a SVR waiting and waiting for their ideal rate. 

Avoiding the jump to a remortgage doesn’t always have to be a fixed rate which could have higher fees to discourage a homeowner from ending the deal early. Tracker rates could be more favorable when the homeowner is awaiting lower rates, and many could offer no fee to switch to a fixed rate deal later on if desired. Overall, a remortgage is likely the better strategy against simply waiting on a SVR.

Now that the Bank of England’s Monetary Policy Committee (MPC) has offered the first vote since March 2020 to cut the standard base interest rate, lenders are busy in a competitive lending market attempting to win out the attention of borrowers. Remortgage rates are now dropping to reflect the earlier declines in mortgage lending. While the MPC’s base rate was cut to 5.0%, lenders are offering rates at or even under 4.0%.

Meanwhile, hopeful home buyers taking advantage of lower mortgage rates are returning to the market and that is also good for homeowners. As buying continues, property values could rise for some areas, and when they do this will have a favorable outcome for homeowners when they remortgage.

Just as when first mortgaging, homeowners will face the loan to value ratio used by lenders, or also known as the LTV. Lower interest rates are offered to those that have less risk for the lender, which is more often determined by those with higher value properties to the amount they wish to be loaned.

Rising property levels will have a positive impact on homeowner LTV ratios and will bring about qualifying for the better if not the best interest rate deals available. 

Meanwhile, another factor indicating it is a good time to remortgage for homeowners is lower inflation. It was not long-ago inflation was in double digits, now it is hovering slightly above the target rate of 2.0% at 2.2% and is expected to drop below target next year. When inflation lowers, it can take a bit of time for the relief to reach the consumer level, and now is when consumers are likely to be finding their spending money has more power and their budgets are experiencing relief. 

Remortgaging now could be the smartest strategy for a homeowner at the end of their term, those that were moved to a SVR, and even those nearing the end of their mortgage term. Shopping online to obtain remortgage quotes is the first step in discovering which deals are available and what savings and even peace of mind can be found.