It’s no secret that mortgage rates have been a tumultuous topic of conversation in the financial world in 2023. There have been hiked interest rates for several years in a row now, but what is the next step with regard to mortgages in the coming months? There isn’t much scope for rates to creep any higher in the coming months, so that may mean right now is the ideal opportunity to remortgage.
But before you jump on the phone with another possible mortgage provider, it’s important to know the facts and how they might affect you as a mortgage holder in the coming years. In the last meeting that the Bank of England held, they agreed to stick to a base rate of just over 5%, which suggests that the end of the rises are very near.
Two Years of Rising Mortgage Rates
It’s been over a full two years of increasing mortgage rates and homeowners and first time buyers are ready for a dip in the market. After the first rise in 2021 then followed a further fourteen consecutive rises in order to tackle the ever growing rates of inflation. It wasn’t a good era for those trying to navigate potential rising mortgage payments on a new home and it seemed as though there was no end in sight. There was a slight dip after October 2022, but it then peaked again in May 2023, so mortgage rates stayed high as a result. So, what does all of this mean now for your remortgaging plans before the end of the year?
There Are Remortgaging Possibilities
Just because mortgage rates are high, doesn’t mean it’s necessarily a bad time to go through a remortgage. Perhaps you’re nearing the end of a fixed-rate mortgage deal or you’re sitting with a variable mortgage rate at the moment, and hoping to scope out new options. You want to know the best thing to do at this moment without dramatically increasing your monthly payments to the bank.
Pros and Cons
There is a chance that mortgage rates are going to come down in the near future, so you may want to think about a slightly shorter two or three year fixed term deal. This means that you can have peace of mind that your payments will stay the same for the next few years, but you’re not completely tied into a high rate for an extended period of time. A lot of mortgage holders find comfort in knowing exactly what is coming out of their accounts every month, so a fixed rate is the ideal choice in the scenario.
However, if you’re not too phased by the up and down nature of a flexible mortgage, you may want to look into a tracker mortgage as your first option. This means you can exit the deal without a hefty fee. Getting your numbers just right in this case is extremely important as you will need to figure out which will be the most affordable and fruitful option for your financial situation. There are a number of reputable mortgage advisors in your local area, who will be able to scope out the best possible deals to suit you. Getting in touch with someone may give you the clarity you need to make your final decision regarding remortgaging. It always feels like a risky move to take, but sometimes it can benefit you hugely to get a professional perspective on the market.
Don’t Switch Too Soon
Although you may be keen to get out of your current deal and find a new mortgage solution for the long term, it can sometimes be a good idea to hold tight and play the waiting game. Switching too soon can incur large exit fees or penalties which could be up to thousands of points. If your policy is coming to an end very soon, now is the right time to start researching. Luckily, there are a number of free tools online to help you figure out the best options for you, including free mortgage calculators online. Speaking to a professional or using useful online tools will help you to make the best decision possible with regards to remortgaging this year.
Ideally, you want to start planning for a remortgage around three to six months before your current deal runs out, so don’t leave it until the last minute to do your research. Make sure your credit score is looking good, scope out the market for potential deals and get advice from a mortgage broker, especially if you’re running a business or working on a freelance basis.