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Price war prompts remortgage surge

  • 13/05/2015
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Price war prompts remortgage surge
Borrowers are seeking to save up to £100 by remortgaging to a cheaper deal, according to research by Nottingham building society.

The society found up to one in six homeowners are considering remortgaging over the next six months with five-year fixed rates the most popular choice for those switching deals.

The survey found remortgagors are targeting an average saving of £99 a month – equivalent to £1,188 a year.

The Nottingham research is the latest in several studies to suggest remortgaging is on the up. Council of Mortgage Lenders figures show lending for remortgaging increased 15% month-on-month last month while industry experts are forecasting a surge in remortgaging in response to recent rate cuts which have seen five-year fixed rates drop below 2%.

Research from Connells Survey and Valuation found remortgaging was the best performing sector of the market in April. Activity was up a quarter on a year ago and compares strongly to the 34% dip in March. Meanwhile lenders such as Leeds building society and TSB are cutting rates on remortgage products.

The Nottingham’s research shows five-year fixes are the most popular choice for customers considering remortgaging. 27% of potential remortgaging customers would choose a five-year fix ahead of 21% opting for a two-year fix.

Just 7% of those surveyed are opting for tracker rates while 4% would consider discount deals and 7% say they would choose a standard variable rate.

Ian Gibbons, Nottingham Mortgage Services, senior mortgage broking manager, said: “The mortgage price war is interesting to existing homeowners who are keen to take advantage of the record low rates.

“With interest rates expected to rise in the coming years then now could well be the right time for many to consider whether there are savings to be had.

“Potentially savings are higher than the average £99 a month people are looking for. Someone with a £150,000 mortgage who moved from a deal at 4% to one at 2% could be around £3,000 a year better off.”

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