Borrowers seize the day to switch and save thousands

Melanie Bien
Sunday 23 February 2003 01:00

Finally, home owners seem to be getting the message about how easily they can save thousands of pounds: new figures reveal that remortgaging is at the highest levels ever seen.

Last month, remortgaging accounted for more than half of all new home loans, as figures from the Council of Mortgage Lenders (CML) show. This is unprecedented, with £9.6bn of the total £18.6bn in gross advances being used for remortgaging.

"The phenomenal rise reflects both the attractiveness of the refinancing deals available and also the continuing appetite among consumers for equity withdrawal," says Michael Coogan, the CML's director-general.

But there are other reasons why remortgaging has increased relative to the number of people buying their first property. The housing market has slowed down, with more of us staying put and looking at ways to improve both the home we already own and our finances. Meanwhile, many people are concerned that the market is at its peak, and a lot of would-be first-time buyers are holding off until the picture is clearer.

"Fewer purchases are going through," says Mark Harris, director of mortgage broker Savills Private Finance. "More people are thinking that they won't buy now but will wait and see what happens. Yet you don't have to move house to move your mortgage. You can still save a lot of money just by remortgaging."

Of those who are remortgaging, most are not just shifting the £100,000 they still owe on their mortgage over to another lender. "About 90 per cent of remortgages aren't just straight swaps," adds Mr Harris. "When they remortgage, people are also raising money to repay debt, invest in buy-to-let properties or to build an extension."

With the Bank of England cutting interest rates to 3.75 per cent earlier this month, there are many low mortgage rates available – and plenty of attractive offers.

Fixed-rate deals are especially competitive, particularly if you think it is unlikely that the base rate will come down much further. Portman Building Society is offering a five-year fix at 4.24 per cent. But the real bargain is the five-year deal on offer from Chase de Vere Mortgage Management, fixed at 4.19 per cent until 1 March 2008 – the lowest deal of its kind for more than 50 years.

The offer is available to first-time buyers as well as those remortgaging and there is a lender's completion fee of £495. "We are delighted to be able to market this product at a rate that many would have regarded as fantasy a few months ago," says Simon Tyler of Chase de Vere Mortgage Management.

"Now borrowers have the chance of turning their dreams of long-term financial stability into reality."

Contacts: Chase de Vere Mortgage Management, 020 7930 7242 or; Portman, 01202 563502; Savills Private Finance, 0870 900 7762.

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