Bring your mortgage costs under control

With so much confusion in the mortgage lending market, should you remortgage now or wait for a better rate?

Anyone who’s been attempting to keep track of the property markets in recent weeks can be excused if they have a serious headache.

Firstly on the back of the credit-crunch and a succession of base rate hikes, the base rate was finally cut in December to 5.5% - good news at last! Or so we thought…

However, many lenders chose not to pass on the benefit of the rate cut and now bleak times are being predicted with the Council of Mortgage Lenders (CML) reporting that the total number of home loans granted in December fell by 25% on the previous month – producing the lowest lending figure since May 2005.

Bizarrely, our figures show that the average cost of a fixed-rate loan has actually climbed from 7.3% a month ago to 7.31%. Though the figure is marginal it goes against homeowners’ expectations and anyone who waited until after the base rate cut to get on a fixed rate will actually be worse off.

So with more rate cuts expected – as many as three more are forecast for 2008 with the first predicted for February – what should your course of action be?

Well if you have an excellent credit score you needn’t worry too much. The best deals should still be available to you and you can make significant savings with rates as much as 0.39% less than a month ago.

Tracker and discount rates carry particular appeal with more rate cuts expected – however, you may prefer a fixed-rate deal for long-term peace of mind. Here are examples of the deals available:

  • National Counties Building Society – 5.65% tracker rate for five years (subsequent rate 7.84%) with a low fee of £395.

  • Alliance & Leicester – 6.23% fixed rate until January 2010 (7.69% thereafter). It’s a fairly high rate but has the advantage of being fee free.

However, if your credit score is less than excellent you really need to evaluate all the options available to you - if you move now, chances are that a fixed-rate deal will almost certainly cost you more.

My advice is that you should act based on your individual circumstances and seek independent guidance.

Even with further rate cuts on the agenda, it seems things will only get worse before they get better. So don’t hesitate and act now – seek expert advice and find a remortgage deal that’s right for you.

DISCLAIMER: Please note that any rates or deals mentioned in this article applied at the time of writing and may no longer be available/applicable today.

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