How often can you Remortgage your House

When''s the Remortage going to run out of fuel? - UK Finances

Today's updating of mortgages shows that mortgages work in a way we have called "a two-speed market" in the past. Housebuying is relatively sluggish in this case (strong first-time buyers, compensating for persistently low levels of business where home owners want to move), while debt rescheduling has risen sharply year-on-year. In April there were 40,800 debt rescheduled, an rise of 36 percent over the same period last year.

This is a rapid increase in everyone's speech, but by no means unparalleled. And apart from a slump in March, debt rescheduling has been on an uptrend since about May last year. For a long time the Bank of England has signaled its intention to increase interest rate if the terms are right, and eventually did so last November, to 0. 5 per cent. What is more, the Bank of England has been in the process of increasing interest rate.

However, while November saw a year-on-year 11 per cent pick-up in debt rescheduling activities, this was even lower than the previous month's figure. Indeed, funding has been unpredictable since around May last year, but up. Mortgage repayment histories show that borrower generally do not respond to a hike in interest rates after it has happened, nor do they act at the last moment.

Rather, when interest rises are likely in the next few month, they act more and more to tie themselves to interest levels (where attractive) in front of the bend. At the beginning of the new year, borrowing costs also rose by 19 per cent compared with the previous year, as borrower expected a possible hike in March.

However, we noticed a decline in activities in February and March. Though the expected interest hike in May did not really occur due to the Bank's economic picture, it is a case where most still expect an increase earlier rather than later.

It is likely that the sharp pick-up in the April numbers will at least partly represent another round of funding before the anticipated upturn. Had interest rates been the only driver of funding behavior, we would have anticipated relatively robust numbers in February and (to a smaller extent) March, rather than the decline we actually saw.

However, there is a second strong driving force, and it is that the remoortaging activities primarily stem from the inventory of borrower who are not on a dealing basis (and therefore can remortgage without causing early redemptions). At present, there is a considerable number of borrower who have been siting for some considerable period on the often relatively low standard variable interest rates (SVRs).

Another major category of borrower re-mortgagors are those who are at the end of their existing business and usually enter into a new transaction as soon as their existing one matures (or very soon thereafter). We know from anecdotal evidence that as part of their storage strategy, creditors are more and more turning to their mortgages to remind them when their deals end.

While many clients then conclude a new transaction with their current lenders (product transfers), for others it can serve as a catalyst for rescheduling debt elsewhere. On the basis of our Regulated Mortgage Survey the following graph shows the development of the maturing transaction ratios in the past due to the termination of deals (mostly interest rates).

An example is if there was a bit in two-year fixed-rate mortgages typed two years ago, this installment of Mortgages is now going to come to the end of this agreement, free of amortization fees and perhaps looking for a new agreement. A corresponding increase is to be expected in the mortgage lending segment, especially if prices are favourable and bank interest rates are set to rise - both are currently the case.

From then on, we can see that the second quarter of this year has a much higher level of closing quotas, so that the very significant growth in remorse business in April is fully compatible with this. Remortage at first, then a one-speed mart? Looking ahead, the probability of a hike in interest in the near term, together with the higher volume of maturing assets, is likely to affect the strength of funding until the second quarter and into the third quarter and a further pick-up in the second quarter of 2019.

But if we look further into the future, we might begin to see less redemortage figures as borrower chooses ever longer-term fixes. Almost half of all fixed-rate mortgages granted so far this year have been in place for five years or more, up from less than 30 per cent two years ago (when the clear preferred was two-year fixation).

There will be fewer fixed-rate exposures each year as this shift begins to take hold. As a result, a larger share of the loans will be earmarked for home purchases, which should help to create a lower overall level of GDP in the form of lower debt rescheduling. And, above all, as we move through this prolonged phase of global financial insecurity, a greater percentage of longer-term fixings will also mean that fewer and fewer borrower will be subject to interest rates rising when they arise.