Why 2015 is the year to remortgage your home

Jessica Morris
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With the end in sight for record low borrowing costs, now is an "ideal time" for people to remortgage their homes, using fixed rates to lock-in favourable repayment terms ahead of a rate hike expected early next year.

Since their peak in summer 2012, fixed rate mortgages fell in 18 of the 28 months to 3.15 per cent in December 2014. And during this time, borrowing costs for fixed rates have, on average, been one per cent lower than standard variable rates, at 3.4 per cent Halifax said.

Standard variable rates are set by the lender, and move with the main interest rate set by the Bank of England.

Fixed rates help homeowners manage mortgage repayments by fixing the interest rate over a set period of time. This makes it easier to budget, but if the main interest rates fall further, individuals won't always benefit.

Craig McKinlay, Mortgages Director at Halifax said: "Remortgaging activity remains subdued particularly compared to the strong market activity in 2008. For more than two years the gap between SVRs and fixed rate mortgages has grown, with the latter falling to record lows."

"Current growth projections in the February inflation report support the expectation for a first interest rate rise towards the end of 2015, though uncertainty around the timing remains high. It is therefore surprising to note that more people are not taking advantage of the low rates on offer and fixing their mortgage."

But Carney also said that, if Britain starts to slip into a deflationary spiral, which is when consumers delay purchases on the belief they'll be cheaper tomorrow, interest rates could drop even further below their historic low of 0.5 per cent.

If “global activity continues to disappoint, or if low inflation were to depress inflation expectations, it could become self-reinforcing," he said in a mandatory letter to chancellor George Osborne.

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