Remortgage headache hammers homeowners

Homeowners looking to remortgage this year will face a headache securing a deal as lenders up rates and cut deals available.

Some 1.4 million borrowers have a fixed rate mortgage scheduled to end this year.

But according to a poll carried out Equifax, 62 per cent also confirming they will be looking for a replacement fixed-rate deal, the credit information provider is warning securing a competitive deal could be a challenge.

"It is vital homeowners whose mortgage is coming to an end in the next few months start preparing themselves now," explained Neil Munroe, external affairs director, Equifax.

"First and foremost they need to think about how they will look to lenders – getting a copy of their credit report is crucial to ensure that all the information a lender looks at is up to date.

"They should give themselves plenty of time to find the best deal," he added.

Equifax warns if borrowers leave it too late to remortgage they face a danger they will revert to the lender’s standard variable rate (SVR) - which is likely to see their repayments increase significantly.

However, the Equifax research also finds some 62 per cent of borrowers whose deals are on the verge of completion have not begun to look for a replacement deal.

In addition, the survey also showed a high level of consumer disappointment regarding current lending rates, with 87 per cent saying they feel let down that lenders are not passing on recent Bank of England rate cuts.

The Bank's monetary policy committee (MPC) has cut rates twice in the recent past, in December and February to 5.25 per cent, but this has not prompted a fall in mortgage rates.

Indeed the disappointment felt by borrowers could be further exacerbated by the fact that two major mortgage lenders have actually increased their rates last week.

Yet, the survey also finds some positive news.

Just over a third of respondents said that they intend to overpay on their mortgage this year to help reduce their long-term commitments.

"It looks like many consumers have a hard year ahead, but by planning ahead and choosing their next mortgage deal carefully, homeowners can stay out of financial trouble," concluded Mr Munroe.