Remortgagers urged to make haste
Mortgage broker, John Charcol, is urging homeowners coming to the end of their fixed-rate mortgages to find a new deal as soon as possible.
According to the firm’s senior technical manager, Ray Boulger, borrowers should start investigating their options six months before their current deals expire.
The financial turmoil of the past three weeks means that mortgages are likely to be in very short supply in the month ahead.
Since the demise of Wall Street investment bank, Lehman Brothers, in mid-September, leading UK lenders have begun to increase rates.
Meanwhile, confidence in the global banking sector has continued to plummet and banks have once again become resistant to lending to each other, forcing up Libor (the inter-bank lending rate) and money market swap rates.
Earlier this week, the Bank of England warned that mortgage lending will continue to deteriorate during 2008.
The number of home loans available has already shrunk to 3,500, down from around 15,000 this time last year.
Remortgagers may find it difficult to secure an attractive deal or any new deal at all, perhaps because of the amount of equity they hold in their homes, or because of a less than perfect credit history.
In some cases homeowners will be forced onto lenders’ expensive standard variable rates.
According to Mr Boulger, lenders’ offers are generally valid for periods of between three and six months and there is a strong argument for acting quickly.
However, a cut in the Bank of England’s base rate is expected by November at the latest.
Therefore borrowers whose current mortgage terms extend over the coming four months and beyond, may consider waiting before applying for new a fixed-rate deal.
Around 1.4 million fixed-rate borrowers are expected to remortgage during 2008.
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