Since the 2008 financial crisis, the home market has seen a lot of churning, with the result that home sales are close to an all time low in at least two decades. Home mortgage rates have also nosedived over the last four years, making them very attractive for anyone who wants to refinance their mortgage. In the United Kingdom, home mortgage rates too have hit new lows.
Mortgage Rates in UK
It has recently been reported that fixed home mortgage rates in the United Kingdom are at their lowest levels since 1989, when fixed-rate home loans were first introduced. This mostly impacts new buyers, because lower rates are a marketing technique to get buyers. Even taking that into account, the lower rate of interest is making refinance an attractive option.
The low mortgage rates are a result of the Funding for Lending scheme launched by the British government in concert with the Bank of England in August 2012. Ever since the launch of that scheme, home loan rates have been falling steeply. The scheme aims to push about £80 billion into the hands of borrowers, and is therefore making it easy for borrowers to access money at low rates. The government in the United Kingdom is making a lot of efforts to encourage the sales of houses in UK, which will help the average buyer in the long run because it will indirectly increase the value of every home.
Other reasons to Refinance Your Home
The other main reason to refinance your home at lower rates is purely financial. Once you have zeroed in on a bank offering a lower rate, you should make an calculation about how much can you save, and from there you can make a decision on whether you want to refinance or not.
For example, if you have a £100,000 mortgage that is at a fixed rate of 5.5%, for a duration of 30 years, you will incur a monthly payment of £568 for it. However, if you refinance it with a rate of 3.5%, your monthly payment will fall drastically to £408. Refinancing at a lower rate makes mathematical sense at every point; however, you do have to take care that there are no hidden costs or fees in the refinance deal.
In conclusion, we can say that this is the best time to refinance your home in the UK. With fixed-rate interest rates at their 20-year lows, you can easily get a deal that would have been unthinkable when you got your mortgage.