Your Guide to Beating The Remortgage Rush

Tue, 11 March 2008

HOMEOWNERS were dealt a double blow last week as the Bank of England declined to cut interest rates and some of our biggest mortgage lenders raised rates regardless.

Abbey, Britain’s second-largest lender, hiked prices for the third time in a fortnight taking its two-year remortgage fix from 5.77% to 5.89% and its two-year tracker from 5.86% to 6.14%. Nationwide, the UK’s biggest building society, has increased trackers by 0.25 percentage points.

Brokers have been inundated with calls as tens of thousands of borrowers have rushed to remortgage in response to disappearing deals. Ray Boulger of John Charcol said: “The problem is getting worse – I can’t remember a time when we’ve had so many lenders changing criteria or rates so frequently.”

Between 40,000 and 60,000 borrowers will be remortgaging every month between now and August, according to estimates from the online broker Mform. Homeowners who took out a typical two-year fix of 4.29% in 2006 face a repayment shock of £200 a month on a £200,000 loan, assuming they take the average two-year fix now at 5.5%.