Remortgage now or sit and wait a couple of months?

Locoblade

Hi All

Our current 2 year fix with Nationwide comes to an end at the end of October so if we want to jump to another deal before going onto SVR then we need to remortgage in the next couple of weeks or so.

However, from the odd comment Ive read on the internet and also some media reports (such as on Radio 1 news this morning), there seems to be suggestions that mortgage rates, particularly fixed rates, are now becoming slightly more affordable again (e.g Nationwide dropping their rates today) and many are predicting rates to continue dropping for the remainder of the year.

If thats the case now doesn't seem like the optimum time to sign up for a 5 year fix so Im wondering whether we're likely to be better off waiting a month or two longer, dropping onto SVR for a couple of months if necessary, which at 6.5% isn't significantly higher than Id be paying on a fix anyway, and then re-mortgaging say in 8-10 weeks time when the rates may have dropped a little.

I know its all a risk either way and nobody can forsee the future, but if you experts were to hedge your bets, what would you say the current trend is, are they likely to go higher, stick or drop? If the likelyhood is they'll drop or at worst stick, then surely it makes sense for us to wait a couple of months?

Our own personal position may also lend itself to that idea too. When we last remortgaged we borrowed some additional money (£17k) to build a small extension. Due to planning issues we didn't get permission until earlier this year so our builder is only scheduled to start the build in September. That means that although we still have equity in the house despite the additional borrowing (just over 20%), its currently not as high as it would be if the extension was built, which it should be by the end of October at the latest. This is slightly limiting our choices at the moment because we couldnt get the more attractive 75% LTV fixed rates offered by Nationwide etc. If we delayed a couple of months and had the extension built at time of valuation, it could open the market up a little more, assuming the house prices don't fall so fast that the value in 3 months with the extension is no higher than the current valuation (unlikely I hope!).

Any comments and advice most appreciated.

ultramagnetic_commuter

Their SVR looks pretty good compared with the general market rates for fixes. Personally, I'd be inclined to ride out on the SVR for a little while - I'm probably going to do the same and A&Ls SVR is much worse at 7.19%.

Locoblade

Any further thoughts on this?

Maybe I should include that we're currently considering a 5 year fix with the FD offset product at 6.29%. Although we have no significant savings as of yet (hopefully that will change), offsetting looks attractive if the rate is good because if nothing else, we can offset our combined monthly incomes against it which if managed correctly (paying bills at the end of our financial month and putting fuel/food etc onto credit card to pay a month later), would knock around £15 a month off the fee which brings the effective rate down to around 6.15% (ie we pay as much as we would if we signed up for a 6.15% standard fixed rate with no offsetting). This works on the assumption that (as now) we get very little interest on our current accounts so can effectively count the ~£3k offset as "free" as it wouldnt otherwise be in a high interest savings account. I also think the way FD structure it all and allow flexibility would encourage us to save more as you could see much more easily how it's having a positive effect, so even if the actual rate is a little higher, I still think it would be financially benficial. Has anyone else that's taken out an offset product found that incentive?

I guess it also begs the question - what's the likelyhood of First Direct following suit and dropping their rates in the next few weeks too?

jules73_2

My fixed deal will end at the end of November, and I'm in no rush to fix a deal any time soon.
I do have some savings, which I could pay off some of the mortgage to keep my repayments the same as the SVR at the moment.
I think it's unlikely that rates will increase. More likely stay the same for a while longer, but hopefully drop a little.
It's an individual opinion, and the choice of what to do depends on the size of your mortgage and what you can afford.
For me, there isn't enough to be gained by fixing at the moment.
It's all a balancing act, but I think in the current climate, increasing interest rates will do more harm than good.