Mortgage advice becoming even more important
on: January 9, 2009, 8:53 am
Press Release Author: Melanie Taylor
Press Release Summary: Financial solutions company Think Money have emphasised the
importance of mortgage advice in the current market, as new research shows that 15%
of homeowners taking out a remortgage in late September and early October either had
deals turned down or moved onto their lender’s SVR (Standard Variable Rate).
Press Release Body: Financial solutions company Think Money have advised homeowners
who are looking to remortgage that speaking to a professional mortgage adviser has
become more important in recent months, as the availability of mortgage deals has
remained lower than 2007 levels.
The new NMG Research Survey, carried out for the Bank of England, showed that at the
end of September and beginning of October, 15% of people who had taken out a
remortgage had previously either had applications turned down or had moved onto
their lenders’ standard variable rate.
Standard variable rate mortgage deals – a lender’s basic mortgage rate – tend to be
noticeably more expensive than the lender’s discounted variable-rate mortgages at
any given time, according to a mortgage expert for Think Money.
“Most mortgage deals advertised in the shop window or online are introductory
deals,” she said. “Fixed-rate mortgages are usually priced based on the lender’s own
long-term projections, but most new variable-rate deals are actually discounted from
the standard variable-rate. So the only time homeowners will usually pay the
standard variable-rate is when the pre-agreed terms finish – unless they
The Think Money spokesperson added that the recent base rate cuts by the Bank of
England have meant that remortgaging can save homeowners a significant amount of
“The base rate has fallen from 5.75% to 2% in just under a year and a half, and
while mortgage rate cuts have not been quite so pronounced, they still represent
good savings for people who entered mortgage deals two or three years ago.
“For example, while at the peak of the market in July 2007 the best mortgage rates
stood at around 6% to 6.5%, we are now typically seeing rates of 4.5% to 5%, and
even 4% for homeowners with a particularly high LTV (loan-to-value) ratio.
“To put that in perspective, on a typical £120,000 mortgage, a homeowner moving from
a 6% interest rate to 4.5% can save around £104 per month, or £1248 per year.
“What’s more, many economists are predicting further base rate cuts – so homeowners
with tracker mortgages could benefit even more in the future.”
The spokesperson was keen to emphasise the importance of mortgage advice in the
current market. “With lenders still cautious about offering mortgages, it can take a
little longer to find the right mortgage deal compared with, say, 2007. That may
explain why so many people questioned for the Bank of England’s report had been
turned down by some lenders.
“A professional mortgage adviser can take a look at the homeowner’s circumstances,
and based on that can search a range of lenders for the best mortgage deal available
to the homeowner.”
The Think Money spokesperson urged homeowners to consider their remortgage deal
early to allow plenty of time to find the best rates. “It’s often possible to‘reserve’ mortgages with lenders, so if the homeowner likes the look of a deal a
little while before their current mortgage terms finish, they can ensure they get
the lower rate later in the year. Of course, it’s possible rates could fall more, so
homeowners may want to wait and see what happens in the mortgage market before
making a move.”
Resources for editors:
Think Money homepage: http://www.thinkmoney.com/
Mortgage Advice page: http://www.thinkmoney.com/mortgage/
Remortgage page: http://www.thinkmoney.com/mortgage/remortgage/
Web Site: http://www.thinkmoney.com/
Contact Details: Melanie Taylor
South Langworthy Road,
Salford Quays M50 2ZY