In figures provided by Nationwide, it is believed that the average mortgage holder (with a variable rate mortgage) paid an additional £22 per month on their monthly mortgage payments after the interest rate increase. While some homeowners will be able to pay this additional sum with ease, there will be many homeowners who have struggled to cope with these changes. It is therefore vital that every individual or household knows their budget and what they can afford to pay.
Not every homeowner should remortgage this year
It is important to realise that not every homeowner will find a more suitable mortgage, so it would be wrong to say that yes, every homeowner should remortgage their property in 2018. However, it is certainly worth considering the situation and determining if you can find a better deal. At this point in time, everyone should review their finances and given the importance of mortgage payments, this is likely to be the first agreement that people evaluate.
You need to consider account fee and additional charges when remortgaging as this may impact on the deal you can achieve. There are some lenders who impose exit fees and early repayment fees on their clients when they look to leave their current mortgage. Given that some lenders charge penalties as high as 5%, it is essential that you know when your penalty period is because this may change how much of a benefit you can obtain by switching mortgage.
Understandably, rates have risen recently
With respect to how the market has changed since the November increase in interest rates, there have been a range of increases across different mortgage types. In information provided by Moneyfacts:
- The average two year tracker rate moved from 1.77% to 2.02% from November to December
- Standard variable rate mortgages have risen from 4.6% to 4.74%
- The average two year fixed rate mortgage moved from 2.21% to 2.35% from October to December
While some people may think that these increases indicate that you have missed out when it comes to switching mortgage, the threat of further interest rate increases means that there is still a strong incentive to change if it is suitable.
At Austin Property Services, we know that many people are looking to improve their finances and a better mortgage rate would be preferable. If you are considering switching mortgage in 2018, you need to speak to the experts who can help you find a deal that meets your needs. We are always happy to help so if you need mortgage advice and guidance, please get in touch.