The Remortgage Time Bomb in 2023.
1.4 million borrowers with £290 billion in Mortgages will be looking for new rates in 2023.
The Remortgage Time Bomb
It’s a worrying fact that 1.4 million home owners will have Mortgages totalling £290 billion maturing in 2023.
The vast majority will be offered rates from their existing Mortgage Lender as well as new, well in excess of their current interest rate.
The majority will be coming off of 2 and 5 year fixed rates, and will now need to decide whether to fix on a considerably higher rate or risk a discounted variable or tracker rate. Which will either track the Lenders Standard Variable Rate or Track the Bank of England Base Rate.
Who will feel the biggest pinch
Many in 2021 were able to obtain rates on borrowing at record low levels. Toward the end of the year rates were close, and in some cases below, 1%.
Borrowers who opted for 2 year fixed rates, to take advantage of the cheapest rates on the market, will now feel the biggest shocks.
As in a twist of bitter irony, 2 year fixed rates are now the most expensive in the market, and are at generational high levels.
Why is this such a problem?
Record low rates encourage and enable people to borrow more.
Borrowers Remortgaging will have used low rates as an opportunity to finance an extension or purchase an additional property.
Home Buyers will have felt more comfortable borrowing up to their maximum, as Repayments were affordable.
Mortgage Lenders will have lent more as the rates they stress test borrowing on, will have been lower.
Borrowers will now find themselves in a position where their repayments on like for like Mortgage borrowing will be significantly more expensive.
And Lenders may now deem the applicants Mortgages unaffordable too, meaning they are restricted to their existing Lenders deals only.
What can affected borrowers do?
Seek Mortgage advice from a Mortgage Broker who will check your existing Lenders deals as well as new Lenders, at least 3 months prior to the end of your current deal.
Ask for all of the options available to you, including Trackers, short and long term fixed rates and ask for the pros and cons of each.
Speak to a whole of market Mortgage Brokers which can provide you with the specialist Mortgage Advice you need.
We have a range of reputable Mortgage Advisors waiting to take your enquiry, regardless of the complexity of your case.
So, get in touch and see how we can help you.