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MORTGAGE RENEWAL DUE ? YOU FIX FOR 5 OR 10 YEARS?

Re-mortgaging soon? - Lenders now offering better long-term fixed rate mortgages

Monday 1 October, 2018

Thomas Oliver’s Mortgage Brokers, Vishal Gulrajani and Thomas Wheatley consider the option of fixing your mortgage for a 5 or 10 year term.

The Bank of England raised the base rate from 0.5% to 0.75% in early August. A rate rise often encourages the average consumer to make sure all their finances are in order, so we notice more individuals looking to re-fix their mortgage. 

Recent CACI Limited figures confirm that £100 billion of balances are paying a rate of 3.75% and above, and £82 billion of balances are due to mature between now and December. As a result we expect to see a big increase in the number of re-mortgages as consumers grow more concerned about the prospects of future base rate rises. 

The availability of 10 year fixed rate mortgages increase

Vishal Gulrajani, Mortgage Broker in Goff’s Oak & Cheshunt, Hertfordshire said: ‘One of the big changes we are noticing from banks and buildings societies is the introduction of 10 year fixed rate mortgages and more competitive 5 year fixed rate mortgages. Following the base rate change we haven’t actually seen lenders raise their fixed rate too much if at all. According to moneyfacts the average 5 year fixed rate mortgage has reduced from 2.93% to 2.92%. We are seeing greater competitiveness between lenders in this area of the mortgage market as lenders adapt and offer better long-term fixed rate mortgages. This will come as a real surprise to many because lenders are usually extremely prompt in passing on any extra cost to the consumer. However, lenders realise the property market is very stable and so they are willing to make less margin on these products.’

Thomas Wheatley, Mortgage Broker in Tottenham, North London, said: ‘However, it is worth pointing out that a long-term fixed rate mortgage product is not suitable for everyone and the Bank of England base rate rise does not necessarily mean rates will continue to increase in the future. There are many issues such as Brexit which will affect the economy and future interest rates. We also have a declining property market so any sharp increases in interest rates may have a detrimental impact on the UK economy. I would strongly recommend anyone who is looking to re-mortgage or has a mortgage coming up for renewal to get in touch with our mortgage broking team at Thomas Oliver on 01707 872000. Our mortgage brokers work in Hertfordshire and London offering mortgage advice. We always consider your personal circumstances before offering mortgage advice as we realise everyone has a unique set of personal circumstances. We would not recommend that everyone takes out a long-term fixed rate. For example if you are moving in the near future due to a growing family, you have a new job or expect an inheritance you may be better off waiting and fixing at a later date when your situation has changed.’   

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