As independent mortgage specialists, as you can imagine, it has been a busy time answering clients’ questions since the recent decision leave the European Union.
So what might it bring for all of us who have mortgages? It’s actually a very difficult question to answer………a bit like the whole exiting of the EU is generally extremely complex across all markets and sectors.
Since the outcome was announced, swap rates (which influence the prices of fixed rate mortgages) have fallen sharply to historic lows. As a consequence, we can probably expect mortgage rates to fall in the short term, and we have just seen the first ever 5 year fixed rate below 2% (mortgage rates available depend on individual circumstances and product availability). 5 year fixed rates in particular look extremely competitive right now and it is hard to see how they can go much lower.
Such a huge change to our economy also brings uncertainty, and the Bank of England have been very quick to react by maintaining liquidity in the market so that banks and building societies don’t retreat from lending money as they did after the downturn in 2008. This is good news and should hopefully avoid too many unnecessary “shocks” to the mortgage market.
Many clients are sitting on their existing lenders’ standard variable rate and have been doing so for some time on the basis that “my mortgage hasn’t gone up so that must be good”. Over the last 5 years, 24% of mortgage holders have stayed where they are (source: YouGov) but now is a great time to re-consider that view. Many lenders’ standard variable rates are upwards of 3.99%, some are close to 6%, and there are now potentially large savings to be made by considering remortgaging.
We talk to our existing clients on a regular basis and provide an ongoing mortgage review service, recently we have seen many instances where clients have:-
1 – fixed their interest rate – thereby removing any upwards risk from their largest financial commitment for a period.
2 – either reduced their payments considerably or left monthly payments at their current / higher level; and reduced the overall mortgage term by several years, which can be extremely beneficial in the long run.
We all change our gas and electricity, home insurance, car insurance on a regular basis with relatively modest monthly savings. How much could a remortgage save you if you were to halve the interest rate? One to think about and take advantage of a no obligation review – everyone’s circumstances are different, but it has to be worth a chat?
Local, face to face, independent mortgage advice can smooth the whole process and we would be delighted to help.
Paul Hardingham and Tony Ibson are Mortgage and Protection Advisers at Innovate Mortgages and Loans. Both have over 20 years of experience advising individuals and businesses across the North East of England. They can be contacted for bespoke advice at firstname.lastname@example.org or email@example.com or call 0191 223 3514.
Your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it.