The reduction of the base rate from 4.75% to 4.5% at the beginning of this month was the first change in the rate since August 2004 and the first downward move since July 2003. Recent statistics from the Property Investor Show reveals that the over three quarters of property investors and homebuyers are now considering remortgaging. This figure has been rising consistently over the last three years and is up almost 8% since last year, a trend supported by data from the Council of Mortgage Lenders (CML) who cite that the value of remortgages in the UK is now £9,300 million pounds compared to £5,400 million in 2002.
Nick Clark, managing director of the Property Investor Show, comments: “The move to a 4.5% base rate is bound to make more people think about whether or not they are getting the best deal on their mortgage package, especially as so many homeowners’ lenders are delaying passing on the reduction in their mortgage rates. With this being the first reduction in the base rate for over two years, we can expect to see a boost in the number of people remortgaging. This practice is no longer restricted to professional investors with normal homeowners realising that they can get a better deal on their repayments by shopping around.
“As well as an increase in remortgaging, the reduction is likely to boost activity in the housing and buy-to-let markets. We’ve had twelve months of unchanged rates and inertia was beginning to set in to many parts of the market. Many buyers and sellers have been holding fire over the last few months and they are now likely to move into the market, boosting activity, demand and in turn, prices.”
Lee Grandin, managing director of Landlord Mortgages who will be exhibiting at the Property Investor Show in September, comments: “There has been a visible surge in remortgaging over the last few years. Recently we have seen many buy-to-let investors opting for lifetime trackers as they are at their lowest rates above the base rate. One product we offer is only 0.39% over the Bank of England base rate for the lifetime of the mortgage. The other popular option is three-year fixed rate mortgages which suit investors as they offer some stability but don’t tie them in for too long if rates do come down.”
