Latest news with #remortgaging
Telegraph
5 days ago
- Business
- Telegraph
Average two-year mortgage rate falls below 5pc for first time since Truss mini-Budget
Mr Mendes noted that some two-year deals boasted rates below 4pc. HSBC, for example, has a two-year fix at 3.78pc with a £999 fee, compared to NatWest's five-year fix for the same deposit at 3.85pc with a £1,495 fee. For remortgaging, Santander is currently offering both two-year and five-year fixes at the same rate of 3.78pc with a £999 fee. He said: 'This year, borrowers coming off fixed rates will largely fall into two groups: those whose low five-year fixed rates date back to the pandemic era, and those who took two-year deals following the rate peaks after the Truss-era market shocks. 'With mortgage rates widely expected to continue trending downwards, many borrowers see shorter-term fixes to lock in a lower rate now while keeping the option to benefit from future cuts sooner.' Mortgage rates had surged in the wake of Kwasi Kwarteng's spending review in September 2022, which included £45bn in unfunded tax cuts, triggering turmoil in UK financial markets. On October 20 2022, the average two-year fixed-rate mortgage hit a peak of 6.65pc. Mr Mendes said borrowers increasingly opted for two-year fixes in the hope that rates would fall. Several lenders have since cut rates below 5pc, however, Wednesday marked the first time that average two-year deals had fallen below the threshold in almost three years. According to UK Finance, about 900,000 fixed-rate mortgage deals are due to expire in the second half of 2025, with 1.6 million fixed deals having ended or are due to end across the whole of the year. Bank of England base rate cuts could help to ease cost pressures on some borrowers, with last week's reduction in the base rate taking it from 4.25pc to 4pc.
Daily Mail
06-08-2025
- Business
- Daily Mail
Is your fixed mortgage deal ending? Brokers reveal what those facing higher payments can do
Hundreds of thousands of households are currently deliberating what to do when their fixed mortgage deal comes to an end. Between July and the end of December this year, an estimated 900,000 households will reach the end of their existing fixed rate term, according to UK Finance data. Many will be coming off mortgage rates between 1 and 2 per cent, taken at a time when interest rates were at rock bottom. Now, for the most part they face the prospect of remortgaging to a rate of around 4 per cent or more. The lowest five-year fixed rate in August 2020 was 1.33 per cent, according to Moneyfacts. Now, it is 3.86 per cent. On a £200,000 mortgage with a 25-year repayment term, that's the difference between paying £784 and £1,040 a month. The jump in costs makes the decision on whether to fix for two or five years feel even more important. Short-term fix: Many households will be opting for two-year fixes because the consensus is that interest rates will continue to fall and mortgage rates will follow suit Two-year fixes offer borrowers the chance to lock in for a short period of time in the hope that deals will be cheaper when they next come to remortgage. Five-year fixes will appeal to those that think the risk isn't worth taking, accepting there is no guarantee that mortgage rates will be lower come 2027. Key deciding factors also include whether someone may move home soon, how much they prefer the security of fixed payments for longer and how well they could cope with a rise in mortgage bills. For those who feel a two-year deal is slightly too short and a five-year fix too long, there are now also plenty of three-year deals. Two-year fix is current mortgage preference Santander's mortgage lending figures suggest a preference for shorter-term fixed rate deals. Of its 60,000 customers so far this year, it says 54 per cent opted for two-year fixes compared to just 36 per cent opting for five-year deals. The bank's lowest two-year fixed rate remortgage deal is currently 3.8 per cent, while its lowest five-year fix is 3.86 per cent - both come with £1,058 of fees. However, others say the gap is not as dramatic. Mortgage broker, Mortgage Advice Bureau says that since the start of the year, 54,534 of its customers have taken a two-year fix compared to 49,927 who opted for a five-year deal. David Hollingworth, associate director at L&C Mortgages says he recently saw two customers that were coming to the end of their very low five-year fixed rate deals - both less than 2 per cent. The first is thinking about a two-year deal which will see an increase to a rate of 3.92 per cent and push payments up by almost £490 a month. The other is considering a five-year fix which would result in a 3.96 per cent rate and push their payments up by more than £500 per month. Neither chose to extend their mortgage term - one of the options to reduce unaffordable monthly payments, though it increases the amount owed over the long term. 'Both have decided to keep their mortgage term the same and are taking on the additional monthly cost,' said Hollingworth. 'Of course, they've made different decisions about how long to fix for which may come down to a combination of how much they think rates may move in the next couple of years and how much certainty of payment they want for how long. 'There's no right or wrong answer to that and we'll only know with hindsight which approach works out to be the cheapest.' Should you stick with your current lender? Aaron Strutt of mortgage broker Trinity Financial says the vast majority of borrowers are sticking with their existing lender when it is time to refinance. Households coming to the end of a fixed-rate mortgage should be offered what is known as a 'product transfer' by their current lender. This gives them the option to switch to a new deal instead of automatically being moved onto their lender's more expensive standard variable rate. The benefit of product transfers is that borrowers don't have to go through all the same checks and balances they would if switching to a new lender - though it might also prevent them from getting the best possible deal, as there is no guarantee their lender will have the market best-buy at the time they need to remortgage. Product transfers tend to require less paperwork, no new affordability assessment, and no re-valuation of the property. There are typically few to no additional product fees required, and no solicitor costs either. However, Strutt suggests that the extra admin of switching to a different lender may be worth it. He says: 'We did go through quite a prolonged period where the lenders were offering cheaper rates for people buying a home rather than remortgaging. This seems to have shifted with some lenders much keener to attract remortgage customers again. 'If your deal is coming to an end soon then it is well worth checking to see if there are better rates available through rival lenders. There's no point in giving your lender money for the sake of it. 'Competition in the market has improved and there are lots of deals available below 4 per cent.' Some switch to raise cash or pay off debt There has been a rise in the number of people remortgaging to raise funds for home improvements or pay off debt, according to Strutt. 'We are arranging more remortgages with capital raising for people who want another £20,000 or £30,000 for home improvements, while other homeowners are doing debt consolidation remortgages,' said Strutt. 'One of our clients recently did a huge refurbishment on his property and increased the value significantly. 'He remortgaged away from his lender to recoup the money he spent and locked into a sub-4 per cent five-year fix. 'We have also had clients remortgaging to gift a deposit to their adult children to help them get on the property ladder.' Paying off some of the mortgage debt, or carrying out renovations that significantly increase your property's value, can mean that someone may get a lower mortgage rate. Both enable households to build up greater equity within the property, whilst the percentage owned by their mortgage lender reduces. These levels of equity that measure the size of the mortgage versus the property's value are known as loan-to-value. Lenders will have different rates at varying loan-to-value levels, and someone at 60 per cent loan-to-value (in other words, with 40 per cent equity) could pay substantially less than someone at 90 per cent loan-to-value. 'Paying off some of your mortgage may mean you qualify for a better rate,' adds Strutt. 'If you have done renovation work to your property it may well be worth getting another valuation done by your lender or another one to see you have more equity.' Extend the mortgage term to lower payments Nichola Jomoa, a mortgage adviser at Mortgage Advice Bureau says she has seen borrowers increasing the term of the mortgage in order to cope with higher rates. The mortgage term is the number of years someone agrees to repay their mortgage for, which used to commonly be 25 years but on new mortgages is more often 30 years. By lengthening the term of a mortgage, a borrower spreads their repayments over a longer period of time and therefore reduces the monthly costs. However, it will mean paying interest for a longer period of time and therefore paying more in the long run. For example, someone with a £200,000 mortgage paying 4.5 per cent interest over 20 years would face monthly repayments of £1,265, paying a total of £303,672 over the lifespan of the mortgage. Conversely, someone with a £200,000 mortgage paying the same interest rate over a 40-year term would face monthly repayments of £899. However, they would pay £431,580 over the lifespan of the mortgage: £127,908 more than on a 20-year term. 'We are seeing an increased number of clients extending their mortgage term to keep their monthly payment at an affordable level,' said Jomoa. 'This may not always be possible and can be impacted by age. In some cases, it can lead to a higher interest rate. 'It could mean mortgage payments continue into retirement, and can potentially add several years of expensive interest to mortgage balances.' It is possible to reduce the term again later on if financial circumstances change. I'm cancelling my gym subsrption to afford the monthly payments Roque Way, a technical director for an IT company bought his home in Brentford with his partner almost five years ago. The one bedroom flat, which they bought with help to buy in 2020 has a mortgage on it of 1.58 per cent. However, now they are trying to remortgage and the best rate they can get is 3.92 per cent. Roque says this will see their monthly costs rise from £857 at the moment to £1,285, even with the part that will remain on the government Help to Buy rate, which is below 2 per cent at present. 'I'm just glad we were sensible and didn't over extend ourselves by buying a two bed five years ago. I think we would be in a lot more trouble if we had done so. 'But the jump in costs is still going to have an impact on our lives. Up until now, we have been halving the mortgage costs between us, but this will just become to much for my partner when we remortgage, so I'm going to cover the extra. For me, this will mean adjusting my liefstyle a bit and cutting back on various things. I'll have to cancel my gym subscriptiuon for a start.'
The Independent
29-07-2025
- Business
- The Independent
Remortgaging approvals rise amid ‘unusually high' housing market activity
Remortgaging approvals reached their highest monthly total in more than two-and-a-half years in June, according to Bank of England figures. Some 41,800 approvals (which only capture remortgaging with a different lender) were recorded in June. This was the highest number since October 2022, when around 50,000 remortgaging approvals were recorded. Mark Harris, chief executive of mortgage broker SPF Private Clients, said the rise is a sign 'that borrowers are keen to shop around for better deals even if it means the hassle of applying to another lender'. Mortgage approvals for house purchase also ticked upwards, with around 64,200 approvals made to home buyers in June – the highest figure since March this year. Many mortgage lenders have recently relaxed their rules to allow some borrowers to potentially take out bigger loans. Richard Donnell, executive director at Zoopla, said: 'Demand for mortgages to buy homes increased in June as stable mortgage rates and changes to mortgage affordability encouraged more buyers to agree home purchases. 'Zoopla data shows unusually high levels of housing market activity for the early summer, with sales agreed up 8% on last year and 11% more buyers in the market. 'While activity levels are higher, this isn't feeding into house price inflation, which is slowing. We expect increased housing activity to support demand for mortgages in the rest of the year.' Nathan Emerson, CEO of property professionals' body Propertymark, said: 'The Chancellor's recent Leeds Reforms sent a positive signal to the mortgage market, which should encourage many lenders to focus new products and services towards those on lower incomes to help them take their first step on to the housing ladder.' Lucian Cook, head of residential research at Savills, said: 'Changes in the way mortgage regulations are being applied have the capacity to free up more mortgage lending among both first-time buyers and home movers, especially as we see further interest rate cuts. 'We anticipate that mortgaged buyer demand will pick up gradually, heading into early autumn. However, for momentum to truly build, households must feel more confident not only in their personal finances but also in the broader economic environment.' Sarah Coles, head of personal finance at Hargreaves Lansdown, said: 'In context, none of these moves are earth-shattering. Approvals for purchases came in at 64,200. Last year, approvals averaged 62,700 a month. 'So far this year, they are averaging 64,400. The year before the pandemic, the 12-month average was 66,700. It means this is a relatively steady set of figures.' Looking at non-mortgage borrowing, the annual growth rate for consumer credit increased to 6.7% in June, from 6.5% in May. Within this, the annual growth rate for credit card borrowing rose to 9.7%, from 9.3%. Karim Haji, global and UK head of financial services at KPMG, said: 'The increase in consumer borrowing highlights that some households may still be relying on credit to manage day-to-day expenses. With the full impact of higher remortgage payments now being felt by many, financial strain remains a key concern. 'June's rise in mortgage approvals and remortgaging activity reflects growing borrower confidence amid increasing competition between lenders. Despite lingering cost-of-living pressures, more households are re-entering the market, either to secure better remortgage deals or take advantage of slightly improved affordability conditions.' John Dentry, product owner at the Current Account Switch Service (Cass), said: 'While borrowing can be a useful money management tool, it's critical the associated risks are fully understood.' Households' deposits with banks and building societies increased by £7.8 billion in June from May, following net increase of £4.3 billion in May from April. This was partly driven by households depositing an additional £3.6 billion into Isas. Adam French, head of news at said: 'The sharp rise in cash Isa deposits is a clear sign that rumours of Isa reform are influencing saver behaviour. With talk of slashing the annual cash Isa limit from £20,000 to £4,000, people have been rushing to use their allowances while they still can. It's a textbook example of policy speculation driving real-world financial decisions. 'After years of frozen tax allowances and rising interest rates pushing more savers into paying tax we're seeing a scramble for tax efficiency, and the prospect of that shield shrinking has understandably caused concern.' Cash Isa limits were recently left untouched in Chancellor Rachel Reeves's Mansion House speech, although the Government is expected to continue talking to industry members and others about the options for reform, with a broad consensus that the UK's savings and investment culture needs to be encouraged. Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, said: 'While June's uncertainty in the domestic and global economy may have encouraged some savers to top up their savings to protect their finances, others may have been trying to capitalise on higher savings rates while they were still around.' In June, UK non-financial businesses repaid, on net, £2.5 billion of loans to banks and building societies, including overdrafts, compared with £8.6 billion of net borrowing in May, according to the Bank's report. Within this measure, big non-financial businesses repaid, on net, £2.8 billion, compared to £8.3 billion of net borrowing in May. This was the highest net repayment from large businesses since June 2023. The annual growth rate of borrowing by large businesses decreased to 6.7% in June, from 8.5% in May. The annual growth rate of borrowing by SMEs (small and medium-sized enterprises) increased from minus 0.2% to 0.3% – swinging into the first month of positive growth since August 2021, when there was a 1.3% increase.
Daily Mail
22-07-2025
- Business
- Daily Mail
An anti-fraud restriction on our home is making remortgaging a nightmare
My partner and I are in the process of remortgaging. When we bought the property five years ago the solicitor we used put an anti-fraud restriction on the title. We were inexperienced first-time buyers and didn't know a lot about it, but it seemed like a good idea at the time so we agreed. As it turns out, it has made remortgaging a nightmare. We were told we just needed to get an anti-fraud certificate signed, but we visited two local solicitors and neither would do it. We have gone back to the conveyancer who we used for the purchase but they said we'd need to pay £250 to certify that we are our home's rightful owners. This all seems like a racket to me. Are we going to have this problem every time we want to remortgage? Is there even any point having an anti-fraud restriction on the title? Some friends told us that we can set up alerts on the Land Registry for free which will alert you to any applications to change ownership or register a mortgage. Should we just pay to remove the anti-fraud restriction? Ed Magnus of This is Money replies: This sounds like an utter nightmare as well as an unexpected cost to bear. This anti-fraud restriction on your property's title stops the Land Registry from registering a sale or mortgage on your home, unless a conveyancer or solicitor certifies the application was made by you. While it may be tempting to remove the anti-fraud restriction, it may be worth the hassle and keeping it in place. This is because it's possible for a criminal to steal a homeowner's identity and use it to make an application to the Land Registry. A successful fraudster could forge a transfer of ownership, take out a mortgage on the property or even sell it without your knowledge. The fact you're struggling to get anyone to certify the document shows it must be quite an effective defence mechanism, and a good deterrent to fraudsters. However, the extra hoops it requires you to jump through can be annoying. The Land Registry advises that an anti-fraud restriction on the title is likely to slow down the process of selling or remortgaging. Your friends mentioned setting up a property alert on the Land Registry, which is a different thing. It means you will be notified of certain types of activity on the register in relation to your property, which you can rapidly respond to if necessary. This service currently has more than 1.25 million active alerts protecting properties across England and Wales, and giving homeowners greater peace of mind. For expert advice we spoke to Olivia Egdell-Page, partner and head of the property department at law firm Joseph A Jones & Co, and Andrew Boast, co-founder of SAM Conveyancing. Do they need the anti-fraud restriction? Olivia Egdell-Page replies: The anti-fraud restriction is a protection to you as the homeowner. It requires a certificate in to confirm you are the true owner of the property you are purporting to sell or mortgage. Usually, this means a solicitor who is acting for you in connection with a property will be required to obtain evidence of your identity, not only to comply with their own professional and regulatory obligations, but also to be able to submit an application to the Land Registry on your behalf. I wonder, on that basis, how and why the solicitor who is acting for you in connection with the mortgage is not able to produce this certificate. That would be my expectation and is usual practice, certainly in my firm. Andrew Boast adds: The restriction requires a qualified conveyancer to provide a certificate of compliance confirming the people who are remortgaging, or updating the Land Registry, are the same as those named on the title deeds. They do this by meeting the client, seeing their ID, such as a passport or driving licence, and checking the signature on the mortgage deeds matches the ID provided by the client. The Land Registry will only accept specific wording within the certificate, and will reject any with the slightest of errors. The problem is the anti-fraud restriction offers an almost foolproof anti-fraud protection, which is a pain for you whenever you need to remortgage or sell. The issue is that it needs to be completed every time you remortgage, or when you sell the property. Is £250 too much? Andrew Boast replies: The cost of this service varies from £150 to £300 and you pay more, the more names there are on the title deeds. You can complete the service remotely from your own home or work using a solicitor who offers video calls. Olivia Edgell-Page adds: The firm who acted for you when you purchased would be required to open a file, renew their ID checks and provide the certificate, so whilst £250 seems steep, the amount of time this will take inevitably incurs a fee. How long should the process take? Andrew Boast replies: The meeting with a solicitor is very short; a maximum of five to 10 minutes. The solicitor then drafts and posts the certificate of compliance to the client or their solicitor and then they are able to complete the remortgage or sale. If a meeting was booked in today, they'd have the certificate tomorrow or the next day, post dependent. We suggest special delivery for any cases where time is really critical. What is the Property Alert service? Olivia Egdell-Page replies: If you are concerned about the impact of the restriction moving forwards, an alternative is to activate the Property Alert service, a tool which is offered by the Land Registry. This is a monitoring tool which will enable you to receive email alerts when any activity occurs in respect of any property you have registered with the service. If you receive an alert about activity which seems suspicious you would then be able to take action. Andrew Boast replies: The Land Registry offers another solution to protect against fraud called the Property Alert. You'll be informed if someone applies to change the register of your property, however, it doesn't block them from doing so. This is where an anti-fraud restriction is better. It doesn't tell you the fraud is taking place, it stops the fraud from happening. You have to weigh up the benefit of knowing no one can impersonate you to sell or remortgage your home, against the logistics of obtaining the certificate and the cost. How else can they make themselves more secure? Olivia Egdell-Page replies: In order to protect your interest in the property, it is also recommended that you inform the Land Registry if you change your address at any time. Update this on the title to the property to ensure that this remains current and therefore means that the Land Registry can contact you if they have any concerns. How to find a new mortgage Borrowers who need a mortgage because their current fixed rate deal is ending, or they are buying a home, should explore their options as soon as possible. Buy-to-let landlords should also act as soon as they can. Quick mortgage finder links with This is Money's partner L&C > Mortgage rates calculator > Find the right mortgage for you What if I need to remortgage? Borrowers should compare rates, speak to a mortgage broker and be prepared to act. Homeowners can lock in to a new deal six to nine months in advance, often with no obligation to take it. Most mortgage deals allow fees to be added to the loan and only be charged when it is taken out. This means borrowers can secure a rate without paying expensive arrangement fees. Keep in mind that by doing this and not clearing the fee on completion, interest will be paid on the fee amount over the entire term of the loan, so this may not be the best option for everyone. What if I am buying a home? Those with home purchases agreed should also aim to secure rates as soon as possible, so they know exactly what their monthly payments will be. Buyers should avoid overstretching and be aware that house prices may fall, as higher mortgage rates limit people's borrowing ability and buying power. What about buy-to-let landlords Buy-to-let landlords with interest-only mortgages will see a greater jump in monthly costs than homeowners on residential mortgages. This makes remortgaging in plenty of time essential and our partner L&C can help with buy-to-let mortgages too. How to compare mortgage costs The best way to compare mortgage costs and find the right deal for you is to speak to a broker. This is Money has a long-standing partnership with fee-free broker L&C, to provide you with fee-free expert mortgage advice. Interested in seeing today's best mortgage rates? Use This is Money and L&Cs best mortgage rates calculator to show deals matching your home value, mortgage size, term and fixed rate needs. If you're ready to find your next mortgage, why not use L&C's online Mortgage Finder. It will search 1,000's of deals from more than 90 different lenders to discover the best deal for you. > Find your best mortgage deal with This is Money and L&C Be aware that rates can change quickly, however, and so if you need a mortgage or want to compare rates, speak to L&C as soon as possible, so they can help you find the right mortgage for you.
The Independent
21-07-2025
- Business
- The Independent
Homeowners could save money on their mortgage under new rules
Homeowners are set to benefit from simplified mortgage rules, as the Financial Conduct Authority (FCA) confirms changes designed to make remortgaging or reducing loan terms easier. The City regulator's shake-up aims to introduce greater flexibility and help individuals better manage their financial lives. A key part of the reform involves the FCA removing existing guidance that it deems to have "served its purpose," a move intended to reduce the regulatory burden on financial firms. This adjustment means borrowers could find it simpler to shorten their mortgage term, potentially lowering the total cost of borrowing and mitigating the risk of repayments extending into retirement. Crucially, the requirement for a full affordability assessment will be lifted when a borrower seeks to reduce their mortgage term. However, the regulator has stressed that lenders are still expected to consider affordability diligently when implementing these new flexibilities. Firms retain a responsibility to act to avoid causing foreseeable harm to customers and must continuously monitor and review the outcomes experienced by their borrowers. People should also find it easier to switch to a new lender to remortgage, if they wish to, helping them to access cheaper products. Consumers could see their choice improved by allowing for simpler affordability assessments, where a proposed remortgage is on similar terms to an existing contract, but more affordable than a new deal indicated by a customer's existing lender. The FCA expects many borrowers to continue to benefit from regulated mortgage advice. Lenders are expected to consider what is appropriate to identify consumers who need advice or other support. Emad Aladhal, director of retail banking at the FCA, said: 'We are helping more people navigate their financial lives by supporting those who can afford to buy a home and supporting competition in the mortgage market. 'Consumer needs have changed over recent years, and our rules are changing too. 'Today's changes support growth by simplifying some of our rules, saving consumers time and money, while ensuring they still benefit from advice, where needed. 'We want lenders to use these changes to innovate and better serve aspiring homeowners and existing borrowers. 'These reforms are another significant step in our mortgage rule review, which we're delivering quickly. 'They are supported by the strong protections we've already put in place for consumers in the mortgage market.' The regulator said reform of the mortgage market is possible due to the continuation of high standards, such as the Consumer Duty, which requires lenders to put customers at the heart of what they do, as well as effective affordability checks and support for people in financial difficulty. The FCA's policy statement said regulatory reforms introduced after the 2008 financial crisis have improved standards across the mortgage market, with overall mortgage arrears and repossessions remaining low by long-term standards. The regulator said that, while changes are voluntary for firms, supporting sustainable home ownership and a competitive mortgage market is a collective responsibility. Changes to mortgage rules were included in the FCA's letter to Prime Minister Sir Keir Starmer earlier this year, linking with the Government 's aims to support economic growth. As part of its wider mortgage rule review, the regulator has opened a public discussion on the future of the mortgage market. It is inviting feedback until September 19 2025. Many lenders have recently made changes enabling some people to potentially borrow more, following clarification from the regulator. Paul Matthews, senior director of risk at leading financial services consultancy Broadstone, said: 'The FCA is taking significant steps to make it easier for consumers to make changes to their mortgages and get better support on their available options. 'The easing of regulation will allow lenders greater flexibility to innovate in the market.'
