Mortgage Rates Continue to be Exceedingly Low
The UK property market is continuing to be defined by incredibly low mortgages and savings rates that are at rock bottom. Some savings rates are even reaching record lows.
The Bank of England has released figures that show that the average savings rates have dropped to below 0.1% with August’s figures reporting lows of just 0.09%. New fixed rate accounts are showing averages of 0.29%. Savings levels have increased to £9.1 billion, which is up from an average of £8.5 billion between April and June this year, and above the pre-pandemic average for the year of £4.7 billion. However, levels still remain well below the peak of £27.5 billion last May.
Figures have also shown that low mortgage rates are continuing to drive the property market. The average rate on new mortgages fell 1 basis point to 1.82% in August, just below the average since the onset of the pandemic, while the rate across all mortgages stuck at a record low of 2.05%.
Should I re-mortgage my property?
With the turbulent state of the market after the impact of COVID-19, it can be difficult to know what you should do with your savings and mortgage. However, at the minute it is only best to mortgage if:
- You want a better rate
If you were tied into an initial deal then you may have to pay an early repayment charge. This can often be quite large, up to 2-5% of your outstanding loan and there is also a small exit fee when you repay any mortgage. The savings can be large if you have a considerable amount of mortgage debt.
- Your current deal is about to end
As many mortgages only last two to five years, your lender will put you on its variable rate (SVR) when it finishes. This is likely to be higher than your old interest rate and higher than the best buys available. If so, you want to be ready to re-mortgage to a cheaper rate. You should start looking around 3 to 6 months before your rate ends as there are now delays due to COVID-19.
- You want a more flexible mortgage
You may want a new mortgage that will allow you to take a mortgage holiday when you are going through changes in your life.
- You want to borrow more
Re-mortgaging to a new lender may enable you to raise money cheaply on lower rates – but do remember to take all the fees into account to see if it really is cheaper than other forms of borrowing. The most accepted reason for borrowing more is home improvement.
- You want to overpay and your lender won’t let you
You may want to move to a different mortgage if you have come into a larger amount of money and your original plan will not allow you to overpay.
- You’re worried about interest rates going up
You should confirm all of the facts before you re-mortgage for this reason. If the Bank of England base rate is predicted to go up, this may affect your mortgage payments directly – depending on the type of mortgage that you have. If it’s the rates that new customers are being offered, then this doesn’t automatically mean yours will be affected.
Expert Conveyancing Solicitors
While these are all legitimate reasons for re-mortgaging your property, you should think carefully before taking any serious steps. A discussion with a mortgage advisor one of our specialist probate solicitors should allow you to understand what the best option for you may be. If you decide against re-mortgaging and decide instead that you want to sell property, then our expert conveyancing solicitors can help you throughout this process.
Get in touch today for our expert help and advice.Get in touch