13th May 2015
Nearly one in six homeowners are considering remortgaging over the next six months as the ongoing price war continues to deliver rock bottom rates.
The study, by Nottingham Building Society reveals that most borrowers are hoping for savings of £99 a month – equivalent to £1,188 a year.
This comes as Council of Mortgage Lenders figures show lending for remortgaging increased 15% month-on-month in the most recent data and industry experts are forecasting a surge in switching following rate cuts bringing five-year fixes down to below 2%.
The Nottingham’s research shows five-year fixes are the most popular choice for customers considering remortgaging – 27% of borrowers would choose a five-year fix ahead of 21% favouring a two-year fix.
Around three-quarters of those considering remortgaging would choose a fixed-rate deal. The study found 12% would ideally fix for longer than five years.
Just 7% of those surveyed would choose tracker rates while 4% would consider discount deals and 7% say they would choose a standard variable rate.
Ian Gibbons, senior broking manager at Nottingham Mortgage Services, the whole-of-market advice arm of the building society, says: “The mortgage price war is interesting to existing homeowners who are keen to take advantage of the record low rates.
“With interest rates expected to rise in the coming years then now could well be the right time for many to consider whether there are savings to be had.
“Potentially savings are higher than the average £99 a month people are looking for. Someone with a £150,000 mortgage who moved from a deal at 4% to one at 2% could be around £3,000 a year better off.
“However, to secure the best remortgage deal it is important to look at more than the base rate. You need to search the whole market and to be aware of the product fees that may be charged. A great rate won’t save you much if you have to pay a high fee.”
The latest mortgage offers
Nationwide is replacing its current £500 product fee discount with a £500 cashback available to all first time buyers. Previously, those first time buyers choosing a Nationwide mortgage deal with a £999 fee were eligible for a £500 discount. Now a £500 cashback will be available on all first time buyer products.
The first time buyer cashback is offered in addition to any cashback provided through Nationwide’s Save to Buy, which offers a cashback of up to £1,000 to savers taking out a Save to Buy mortgage, or Flexclusive*mortgage deals, which offer the option of a £250 cashback. It will be paid directly to the customer’s bank account within a month of completion.
At the same time, 10 year fixed rate mortgages have been cut by up to 0.65% for existing Nationwide mortgage customers looking to switch to a new deal, as part of the Society’s Loyalty Rate Mortgages initiative to offer the best rates on the high street to existing customers. Rates for 10 year fixed rate deals start at 3.04% for products up to 70 per cent loan to value (LTV).
Yorkshire Building Society has launched its first-ever range of four-year fixed rate mortgages. Customers with a 35% deposit can opt for a highly competitive 1.89% four-year fixed rate mortgage, while customers with a 25% deposit can chose a 2.29% four-year fixed rate. Customers with a 10% deposit can get a four-year fixed rate mortgage at 3.54%. All these mortgages have an £845 product fee.
Leeds Building Society has launched new two year fixed rate mortgages – at 2.09% up to 75% LTV (loan to value) and 2.19% up to 80% LTV – and a five year fix at 2.94% up to 80% LTV.
All come with a low £199 fee, free standard valuations for properties up to a value of £500,000 and fees assisted legal services for standard remortgages.