Forecast inflation and rate rise to stimulate remortgage market

New research indicates that mortgage advisors believe a rising inflation and an interest rate increase will invigorate the remortgage market within the next quarter.

According to a survey conducted by The Mortgage Alliance, over 75% of intermediaries believe that rising inflation and an increase in the base interest rate will mean many homeowners rush to remortgage.

88% of the intermediaries believe the Bank of England (BOE) will increase its base rate in 2011. Looking at remortgage business, 44% of the brokers said the market had remained the same for the last six months and 41% thought it had grown.

64% of those who look after remortgages said they found fixed rate mortgage deals were more popular and gave better value for money for their clients.

Head of The Mortgage Alliance, Phil Whitehouse, commented:

“Directly authorised intermediaries feel the remortgage market has shown signs of life in recent months and will continue to grow, thanks to a number of market influences.

“It has been predicted that interest rates could rise as soon as May and, if this is the case, it will have a big effect on the remortgage market and the levels of remortgage business being written by intermediaries.”

There are of course some who disagree and feel the base rate will not increase significantly due to the continuing fragile economy. Whilst the base rate remains at record lows of 0.5%, many homeowners are taking full advantage and overpaying whilst they can. Of course, from here the only way is up and at some point it will start to move. It is down to the homeowners’ individual circumstances whether or not they are willing or able to take the risk of increases.



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