Re-mortgaging – the benefits

Banks are reporting a record number of customers re-mortgaging their properties. Most of these customers are seeking to take advantage of two significant trends in the economy. First, lower interest rates and increased competition among banks and financial institutions are leading to better deals on the market. Second, many borrowers' financial situations have improved dramatically since they first took out their mortgage, allowing them to secure better terms and interest rates.

For instance, individuals who initially took out a hundred percent mortgage can often switch it within two years to a ninety or ninety-five percent mortgage, which offers significantly better terms.

Historical Low Interest Rates

In recent years, interest rates have been at historically low levels. Even with recent rate increases, current rates remain far lower than when many existing mortgages were first taken out. This creates opportunities for savings, especially for fixed-rate mortgage holders who can refinance their old mortgage with a new one at today's lower rates. Even variable-rate mortgage holders can benefit, as the formulas for calculating the payable rate have become more favourable.

Increased Competition in the Mortgage Market

The mortgage market has seen increased competition with the entry of numerous competitors from Britain, the US, and Europe. These new entrants are offering customers better deals and more attractive and flexible mortgage terms than ever before. New products allow customers to take advantage of discount periods, make over or under payments, offset savings against their mortgage, or take out interest-only mortgages. Consequently, many people with older mortgages are opting to switch to one of these new, more advantageous products.

Improved Financial Situations

For many borrowers, the value of their homes and their incomes have increased significantly over time. This makes them eligible for better mortgage terms that they may not have qualified for in the past. These new mortgages offer lower rates and better terms and conditions, persuading many to re-mortgage.

In summary, the combination of historically low interest rates, increased competition in the mortgage market, and improved financial situations for many borrowers is driving a surge in re-mortgaging. Homeowners are taking advantage of these trends to secure better terms and lower their monthly payments, ultimately improving their financial standing.