Homeowners are likely to wonder what has changed so much that lenders are lowering their interest rates to historically low levels.  Just a few weeks ago homeowners were facing rising interest rates and now there are lenders that are offering 4 and 5 year fixed year remortgages with interest rates below 3%.  It can be confusing and cause a certain amount of stress as one worries that the cheap remortgage deals will disappear before they can be grabbed.

The continued struggles in the UK economy and the strains in the eurozone had caused a great deal of caution in the global lending market.  That caution caused lenders to become concerned about the risk in offering funds.  They saw the status of the global economic market as a high risk situation and when risk is high then interest rates rise.  As lenders borrowed from one another to get adequate funds to lend, the cost of doing so became more expensive.  That added expense in funding caused lenders in the UK to increase their interest rates and borrowing was becoming more expensive.

In an attempt to keep borrowing affordable the Government established a scheme to offer funds for lending to lenders at low rates so that they could borrow and fund their loans away from the global lending market.  The Government’s new offering came with the requirement that the funds be offered at low rates and be made readily available to those that could qualify to borrow. 

Lenders started taking advantage of the scheme and began offering lower interest rates that had not been seen in long while.  The competition between lenders grew and better and better deals began to be offered.  The very cheap remortgage deals are out of reach for those that do not have high levels of equity and/or deposits but those deals also include some high fees.  Looking at the remortgages that have slightly higher interest rate offerings will reveal that they are still very cheap and have lower or no fees which could make them a better deal for some homeowners over the cheapest deals.

Homeowners are definitely seeing a different remortgage lending market and they should shop around and see what best matches their needs and take advantage of the great deals available.