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Panicked Homeowners 'Take The Plunge' As Increasing Base Rate Predictions Conflict

Fears of the interest base rate rising has sparked a surge of panicked home owners trying to avoid the repercussions by remortgaging or switching to fixed rate loans.
Finance - 24 May 2011   Download IconContent available for download:  
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British home owners are facing a dilemma this month as the interest base rate is kept at 0.5% for the 27th consecutive month. Mortgage lenders have seen a surge in nervous home owners rushing to beat the feared interest rise, with a 16% increase in remortgages between February and March. With some economists pencilling November as a date for the anticipated base rate hike, a growing number of borrowers are deciding not to leave anything to chance and are switching to fixed rate deals instead despite the associated fees and legal costs.

Latest figures show the average application fee for fixed-rate home loans has risen by £97 since September 2009, an increase of 14%. The average application fee for tracker mortgages has risen by £118, an increase of 15%. It’s estimated there are over 3 million homeowners that could benefit from a remortgage but have failed to do so.

Rates have been held at historically low levels while inflation has spiralled to over twice its target rate. Home owners are facing a quandary as money markets and economist can’t agree on when the base rate will change which would hammer the 7.6 million borrowers currently on tracker mortgages.

. Introduction:

British home owners are facing a dilemma this month as the interest base rate was kept at 0.5% for the 27th consecutive month while economists and money markets can’t agree on what lies ahead. Some experts have pencilled November as a likely time for a base rate increase, while others suggest it could be 2012 before we see the base rate change. It’s estimated there are over 3 million homeowners that could benefit from a remortgage but have failed to do so, but lucky for them the rate has sat unchanged.

So is it worth gambling with the unknown future of the base rate?

Joining us to discuss this further is industry expert Mark Smitheringale.

. Suggested Questions:

So what does the research show about remortgages in our area?

How likely is it that the base rate will go up this year?

Why should home owners be considering remortgaging their home?

What are the costs associated with a remortgage?

What advice do you have for households who are worried about second guessing the market?

Where can our listeners find out more information?