One in four 'plans to remortgage

Almost a quarter of homeowners have plans to change their mortgage over the coming year, largely in order to take advantage of the mortgage market's current historically low rates, new research suggests.

According to figures released by Alliance & Leicester today, 15% of homeowners are thinking about remortgaging in the next 12 months, while a further 8% say they will definitely do so. Of those people planning to remortgage, 8% intend to do so because they are dissatisfied with their current lender and 23% plan to change mortgages when they buy a new house, but the vast majority - 60% - are doing so in order to reap the benefits of a better rate.

The increase in enthusiasm for remortgaging noted by Alliance & Leicester today reflects the degree of rivalry across the home loans market to offer the most competitive deals. After the Bank of England's surprise interest rate cut in February, the UK's mortgage lenders responded by cutting their rates - already some of the lowest ever seen on the market - in an attempt to attract new customers and maintain their present customer base.

Many of the biggest high street names - Halifax, Nationwide, HSBC - claim that the rates they are currently offering are their lowest in most borrowers' memories (Nationwide's base mortgage rate of 4.64% is the lowest the building society has offered since 1955). However, anyone planning to remortgage would still benefit from shopping around: according to Moneyfacts, the most competitive standard variable rate on offer at the moment is from Hinckley & Rugby building society (4.3%), with Scarborough building society and Norwich & Peterborough (4.4%) also looking good.

Paul Cooper, head of mortgages at Alliance & Leicester, said: "The increased competition we are seeing in the mortgage market is great news for those thinking of buying and those thinking of shopping around for a better deal.

"While remortgaging will often mean lower mortgage repayments, people should take a sensible approach and look for an offer that suits their individual needs and not just the headline rate."