remortgage, or not?

terylene

Hi,

Does anyone know why remortgage fixed deals are so poor at the moment (unless you've got 20-30% deposit)? Our 2 year fixed deal with Abbey will end in October, and the interest rate will drop from 6.29 to 4.24% SVR. This would obviously be a good saving. But i'm worried that should rates go up dramatically over next year or 2, then jumping on to a good remortgage deal would be even harder? Is this the reason why the deals to fix now aren't that good? - because they might be worse later on?

My plan was to stick on the SVR once my fixed rate runs out and then keep an eye on it to see if it starts rising quickly - then remortgage if necessary? Anyone got any advice as to whether or not this is a good approach? Cheers!

belfastgirl23

I think this is pretty much what everyone is doing - if you do a search on this board for svr you'll come up with plenty of people doing likewise...

edited to say maybe not pretty much everyone but a lot of us

trynsave

There have been many, many threads on this very issue. What to do really depends on how comfortable you are with risk, and how affordable you would find a quick hike in rates to cope with.

The BoE rate dropped like a stone, and in theory it could rise just as quickly. The banks were often slow to reflect a downturn in rates, do you think they'll be as slow to put them up?

One massive consideration is your LTV. As house prices are still dropping it is possible that some who might qualify for a 80% - 95% deal now, won't in 6mths or a years time and find themselves stuck on a rising SVR. Either that or the fees for the best products may rise due to good old supply and demand.

Many seem to think that the rates will stay fairly low for the next year or so, meaning that if you pay more now for a 2yr fix you might find it ending just as rates are going up. Personally, I have no clue so just signed a fixed deal. Would you be comfortable with a longer term fix, and pay more for that security and peace of mind?

It is all a gamble - no one knows and no-one can advise. If you do opt to stay on the SVR try to keep your current levels of payments and overpay as much as possible. That way you will hopefully lessen the impact of a falling LTV as much as possible.