Borrowers who secured a two-year mortgage deal at a low fixed rate in 2017 could see their rates double in interest if they don’t remortgage soon.
According to research from Moneyfacts.co.uk, rates on two-year fixed-rate mortgages fell to a record low of 2.2% back in October 2017 but these figures aren’t quite so promising now.
Estimates suggest that standard variable rates (SVRs) charged to customers whose fixed deals have expired are predicted to rise to 4.89%.
This means that for those who took out a two-year fixed rate mortgage deal in October 2017, their repayments will increase substantially when the deal reverts onto the lender’s SVR.In November 2017, the Bank of England increased the base rate from its 10-year low of 0.25% to 0.5%, resulting in many lenders hiking up their rates and charging customers more.
A borrower repaying a mortgage of £250,000 initially on a low interest rate of 2.2% could see their repayments soar by £4,336 each year if they’re moved onto an average SVR of 4.89% and fail to remortgage in time.
Darren Cook, finance expert at Moneyfacts.co.uk believes this could be a good thing for those willing to remortgage. He said: “This significant increase in motivation for borrowers to switch mortgage deals, and the subsequent potential increase in remortgage business as a result, may push some mortgage lenders to marginally cut rates over the next few months to maintain a competitive edge.”
Remortgaging can have a whole host of benefits such as allowing the homeowner to reduce their interest rate or enabling them to pay off their mortgage sooner.
If you’d like to remortgage your home but you’re not sure where to start, please get in touch with TaylorMade. Our team of mortgage brokers can help you assess your financial situation, compare multiple mortgage products and select the right one for you.
