Due to the international monetary crisis, property owners look set to experience difficulties in sorting out a new deal when their existing fixed rate loans expire in the near future. The number of borrowers whose fixed rate deals run out in 2008 is reckoned to be in the region of 1.4 million.
Borrowers who hesitate really risk slipping into the SVR (Standard Variable Rate) and, because the rates have risen so much in 2008, that would incur a real financial penalty for the borrower. However, recently undertaken research indicates that a significant majority (62%) of borrowers have not yet begun to make arrangements for the end of their fixed terms.
The driver behind the rush to remortgage relates to widespread disillusionment with regard to the near extortionate toll taken by current lending rates. Of course the failure of lenders (Northern Rock is a case in point) to pass on the benefits of recent rate cuts by the Bank of England has not gone down well either. For many, these mortgages represent an opportunity to recover capital stowed away in property value at a time of diminishing consumer confidence.
Of course those borrowers who have an impeccable repayment record with their current lenders, as well as those who have loans of less than 75% of the property value outstanding, will always find it most straightforward to sort out their remortgage. However, even if all this does not apply, borrowers would be well advised to examine their options anyway for the sake of that more competitive rate.
16.4.2008
