According to the Council of Mortgage Lenders, re-mortgaging has now climbed higher than ever and is 50% higher than 2002. When commenting on the increased levels the Council of Mortgage Lenders said that homeowners were taking the opportunity to lock into fixed rates of interest, just in case rates rose higher. They also claimed that house price inflation had prompted re-mortgages to release equity.
Our View
We strongly believe that interest rates will continue to rise. This could be a good time to lock into fixed rates. However, be aware that long term fixed rates could become expensive if rates fall backwards. Shorter term fixed rates could be of benefit but the problem could be that interest rates are peaking, just as your fixed rate ends. This could mean a sharp hike in mortgage payments.
Make sure you are aware of the pros and cons involved in fixed rates and read the small print. There is nothing wrong with releasing equity from your property but be aware of the negative equity possibilities.
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