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 The Monetary Policy Committee (MPC)’s decision to leave the Base Rate unchanged at 0.5% and not to extend its Quantitative Easing (QE) programme has implications for the mortgage market, according to Ray Boulger of independent mortgage adviser John Charcol.
"We are now around four months into the trend of mortgage rates gently falling, with lenders generally cutting just some of their fixed and tracker rates, rather than most or all their products, at any one time.
“We have also seen a significant increase in the number of deals available, particularly at the higher LTVs, although the impact of Basle 2 means that those borrowers who need more than 75% LTV will continue to pay a big premium compared to those with deposit / equity of at least 25%.
"The slowly improving mortgage market will certainly make buying a property a little easier. However, with several lenders having announced increases in their standard variable rate (SVR) over the last month, it will also mean that more borrowers will find it worthwhile remortgaging.
“Remortgage activity fell steadily throughout the whole of last year, but the combination of actual increases in SVRs, plus fears of increases, coupled with the cheaper rates now available for new mortgages, means that anyone paying an SVR of at least 3.5%, or about to revert to one, should consider a remortgage if they have at least 20% equity in their property.
"Assuming property prices continue to rise, even only gently, the number of borrowers with at least 20% equity will steadily increase, making a remortgage progressively worthwhile for more people. For this reason I expect the dramatic fall in the volume of remortgaging to be close to end and to see a slow increase in remortgage activity this year."
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