40% Potential Reduction in Rates May Jumpstart Remortgages in 2010

At the start of 2010, lenders were quick to react when reports of a possible remortgage surge hit the airwaves. Coventry Building Society and Abbey were among the lenders who stepped out to announce their efforts to give the remortgage sector a long awaited boost.

Coventry is now offering new fixed rates on some of its existing products, along with a new five-year fixed rate mortgage. Abbey unveiled a new three-year and a new five-year loan program aimed at keeping the remortgage market on the upswing.

Coventry Fixed Rate Mortgages Take on a Fresh New Look

Coventry Building Society, the third largest building society in the UK, recently revealed the total makeover it gave to its loan program portfolio. At the start of January 2010, the new rates in effect for Coventry’s fixed rate loans include remortgage options for up to 85% LTV (loan-to-value) and a valuation as high as £650.

Coventry’s two-year fixed rate, currently priced at 3.6%, is perfect for a homeowner looking to remortgage at up to 50% LTV. For a slightly higher rate of 3.75%, a borrower can receive a loan as high as 70% LTV. Higher LTVs of up to 85% can be financed at 5.5%. Coventry also launched a five-year fixed rate priced at 4.99% for up to 50% LTV.

Colin Franklin, sales and marketing director of Coventry Building Society, gave this additional insight into Coventry’s aggressive move, "The remortgage market has been pretty quiet recently, but the launch of our new fixed rate products should change this.” Homeowners are undoubtedly hoping for the same.

Abbey Wants to Play a Major Part

Abbey Mortgage (now Santander) also took some decisive action so it could be among the major players of the remortgage surge.

The new products among Abbey’s extensive line of products include a three-year fixed remortgage program, as well as a five-year program that creates new possibilities for both new homebuyers and remortgage clients. The three-year program is priced at 4.29% and is available for home mortgages up to 75% LTV. The five-year program is priced at 4.95% and is available for home mortgages up to 70% LTV. The five-year deal is an exclusive offer for current Abbey or Alliance & Leicester bank account customers. Both the three-year and the five-year program carry a £995 booking fee.

Nici Audhlam-Gardiner, director of mortgages at Abbey and Alliance & Leicester, understands what is happening in the market and commented, “We are seeing an increasing demand for medium-term fixed rate mortgages as homeowners consider the possibility that base rate will rise in the future.”

Where the Remortgage Market is headed

With such a large number of homeowners who stand to benefit from the rate reductions, it won’t take long before lenders like Coventry and Abbey see droves of people coming in to take advantage of the shift. Let’s hope they all make it in time to beat the anticipated expiration date in the fall of 2010.