A significant rise in people re-mortgaging to improve their existing homes could hit the new-build property market during 2017, mortgage broker Chris Schutrups has warned.
Schutrups, managing director of The Mortgage Hut Group, said some of the UK’s major house builders had been predicting a slowdown in completions during 2017, and that had been further evidenced by an increase in remortgage applications as more people sit tight and improve their existing property.
And with record numbers of people in the next few months likely to end up on a standard variable rate mortgage after a fixed rate deal ends, the boom in remortgages is likely to continue.
“The next quarter will see the biggest ever number of people currently on fixed rate deals with their mortgage lender being switched over to the standard variable rate,” said Schutrups.
“Lenders are very aware of this situation and are monitoring it very closely because they want to keep their customers.”
“Anyone who is looking to make some savings this year or to cut back on their outgoings will be looking at their mortgage very closely - it is usually the biggest expenditure any of us will ever make. And that amount of borrowing means slight changes in interest rates can have a big effect on monthly payments.”
“Making a saving of £100 or £150 per month on a re-mortgage is really not that unusual these days - and who wouldn’t like £1,200 or £1,800 a year in their bank account rather than going out on their mortgage?”
“Re-mortgaging is a really good strategy for anyone who is looking to save money, cut back on outgoings, or to make improvements to their home, and more people are recognising that they have to shop around to make sure they get the best deal they can,” he added.
“Uncertainty is fuelling this behaviour. I don’t think people are really that bothered by Brexit or the Trump effect - the truth is many people are feeling the pinch and have less money than they did have, and more people are concerned about their futures with cutbacks across the economy.”
“With interest rates at a record low level they can only go in one direction and that is up. There is already some talk of that during 2017 so the chance to re-mortgage to a fixed rate and save money is looking increasingly attractive for borrowers.”