I was recently reading an article titled “Everyone is re-mortgaging and you should too” – link here. The summary from this article if you don’t fancy reading it all is as follows: lots of borrowers are on SVR (standard variable rates), the article sets out that there is potential for interest rates to rise – they can’t go down, so that would hardly be surprising…
Anyway, the article refers to the most recent statistics from UK Finance, which provides reporting and information for the mortgage and particularly the buy to let finance marketplace, 5,000 transactions in March 2019, down by 9.1% from last year. Clearly the measures which the government has implemented attacking the BTL marketplace are beginning to bite, however, the interesting figure which is quoted is the volume of buy to let re-mortgages which are up 3.9%.
Inertia has kicked in for the property market over the past couple of years, in a big way. This is unsurprising given that Brexit has been top of the agenda for the past 3 years, and we are still no closer to knowing whether we will leave the EU and if so what the repercussions of our exit will be, whether it is a soft, semi-soft or hard Brexit we still don’t know. This has frankly tanked the UK economy, with lots of businesses beginning their exits from the UK as anticipated, particularly global conglomerates which can manufacture and carry out their business elsewhere with more advantages.
That said there is a real risk that inflation is beginning to bite in. The inertia which crept into the market over the past 18-24 months has for many got boring and people are getting on with their lives as normal, sales are continuing which in turn is causing inflation as products are continuing to rise in value.
Back to our article, the summary is that if you are on a bad SVR product now may be the time to exit on to a fixed rate, but as ever it is impossible to predict a) who is going to be in power as of next month, b) their approach and attitude to Brexit, c) what effect this will have on inflation. Therefore it is impossible to know where things are, if you fix for 2-5 years, this gives you certainty around the monthly payments, so makes things more predictable – however, who knows where we will be this time next month let alone in 5 years time!