New buyer mortgage deals 'creep up' as remortgaging drops

May data from the Bank of England confirm the trend lenders have been seeing.

With standard variable rates so low, home owners are happier to stick there, rather than remortgage onto high fixed rates – despite warnings that the moment the Bank of England increases rates variable rate deals will jump, as will fixes.

Fixed-rate mortgage deals have already started to rise.

Falling house prices putting some homeowners in negative equity or leaving them with very little equity is also creating a brake on remortgaging.

Last week rating agency Fitch warned 35 per cent of borrowers do not have enough equity to secure a remortgage.

In May there were 30,984 remortgage deals – 9.8 per cent down on the six-month average.

Andrew Montlake, at mortgage broker Coreco, said: "I am concerned that the number of remortgages has fallen. Fixed rates are rising and anyone settling for short term gain on a lender's SVR could be in for some long-term pain.

"People wanting to have their cake and eat it could fix part of their mortgage and leave the rest on a tracker, which will at least give some level of security without substantially upping their current payments."

The number of house purchase deals stood at 43,414 – up 21.7 per cent on the six-month average.

However, high deposits needed to make a purchase are still holding back many first-time buyers from taking advantage of low house prices.

The mortgage market as a whole, however, remains anaemic, with lending growth dropping from over ten per cent two years ago to 1.4 per cent now.

Mr Montlake added: "Slowly but surely, the number of new home loans being approved is creeping upwards, reflecting the growing confidence in the UK property market.

"Some people were expecting better figures but let's not kid ourselves, it's still very difficult to secure mortgage finance at higher LTVs."


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What To Expect With An Offset Remortgage

Like other offset mortgages, the offset remortgage is much in demand, as UK home buyers wake up to the benefits of flexibility. The best offset remortgage deals have all the flexible features of other offset deals, with a couple of added incentives for remortgage customers. With flexible remortgages, home buyers can expect to save on a couple of fees that other home buyers might have to pay. These include legal fees and valuation fees, for example. Some offset remortgage lenders also wave arrangement fees and many may offer insurance products as added incentives for flexible remortgage customers.

An offset remortgage will also usually be portable, which means that if buyers move to another property they can move the mortgage without incurring additional mortgage fees. And an offset remortgage will also allow borrowers to overpay, either by paying in a lump sum to the mortgage account or by making a regular overpayment. Offset remortgage customers should also look out for underpayments, as this might be a useful feature if circumstances change. However underpayments and payment holidays could increase the mortgage term and/or the total amount payable.

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The Importance Of Remortgaging

I personally believe that the quality and suitability of a homeowner’s mortgage is the second biggest factor that will ultimately determine the success of a property investment, especially with buy to let investors; the biggest factor being the market condition. However, you alone can’t control the market condition, but you alone can play a key role in determing the fate of your mortgage.

A mortgage is probably going to be the biggest financial responsibility you will take on, so it is a big deal. Forget your lousy electricity and water bills- you will still have a home even if failing to pay those. The majority of people will be at their mortgage lender’s mercy for 25years or there about; that’s a long time to be on your knees and it’s certainly not an enjoyable position to be in (some may protest to that claim).

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