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The switching hour

Is it the right time to remortgage? Paul Thomas assesses opinion

Lenders have recently launched some attractive deals aimed at persuading borrowers on standard variable rates to remortgage.

Last month, Barclays released a lifetime tracker pegged at the Bank of England bank rate plus 2.18 per cent available up to 70 per cent loan to value. Under the switch and fix offer, borrowers can switch to a fixed-rate mortgage at any point with no early repayment charge.

Royal Bank of Scotland released a two-year tracker at base rate plus 1.49 per cent up to 60 per cent LTV and a five-year fixed rate at 3.99 per cent at 60 per cent LTV and no fee. Yorkshire Building Society last week offered a 2.89 per cent two-year fixed rate at 75 per cent LTV.

Abacus Financial director Matthew Fleming-Duffy believes now is the right time for some borrowers to look at remortgaging.

He says: “If the mortgage market review gets pushed through in its current form, the mortgage market is going to shrink, which means the ability to remortgage will diminish for a lot of people.

“Not only that, but, depending on who you talk to, the austerity cuts will create bigger house price drops in the coming months. Again, that will reduce the number of people who can remortgage. “At the moment, we are sitting on a seesaw where we have still got some good rates, because the BoE has not pushed interest rates up.”

First Action Finance head of communications Jonathan Cornell says that it is a particularly good idea for public sector workers to look at remortgaging.

He says: “We have seen some excellent rates recently, specifically from NatWest and Barclays. Also, with the spending review, a number of public sector workers may well lose their jobs in the coming months. They could remortgage now to get a decent rate and avoid being stuck on a standard variable rate.”

London & Country head of communications David Hollingworth says there is too much focus on low SVRs as most people are not on them.

He says: “We get bogged down talking about SVRs at 2.5 per cent. Most of the market is not charging 2.5 per cent. Clearly, if you are on 2.5 per cent you have a much bigger decision to make and a lot of those will probably stay put.

“However, many people will be paying 4 and 5 per cent and higher.

“It is not a lost cause and you should be regularly reviewing the mortgage situation as there will be potential to save some money at some point.”

Email Mortgages chief executive Michael White says borrowers should wait until it looks like the bank rate is going to increase before considering remortgaging.
He says: “The time to remortgage is to coincide with imminent base rate increases but I do not think there is any imminency in terms of rate rises. Therefore, it would be difficult to make a case for a lot of people to move away from a rate that is incredibly low to one that is higher. That would be poor advice.

“However, if you are on a fairly middling rate and you get the opportunity to fix in for budgetary purposes, then that makes complete sense.”

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