Before we look ahead, it’s important to understand the current state of the remortgage market. As of 2024, interest rates are still high by historical standards, and inflation continues to pressure household finances. The Bank of England’s decisions on interest rates will remain one of the significant factor in determining the attractiveness of remortgaging offers.

Interest Rates: A Key Factor in 2024/2025 Remortgaging Decisions

In 2024, many homeowners are feeling the squeeze from higher interest rates. According to UK Finance, 1.6 million homeowners are expected to remortgage in 2024 as their fixed-rate deals come to an end. This shift is largely driven by the need to secure more affordable monthly payments in light of increased living costs. Homeowners must weigh their options carefully to determine whether now is the right time to remortgage.

Recent Data on Interest Rates:

• The Bank of England base rate, which influences mortgage rates, has risen significantly over the past year. As of 2024, the base rate stood 5.25% – 5.00%, As of Nobember 2024, it has now been reduced to 4.75% with expectations for further adjustments throughout 2024 and 2025.
• Fixed-rate mortgage deals are higher than in previous years, with the average 2-year fixed mortgage rate reaching 5.25% in early 2024, but we are seeing encouraging signs of rate withdrawals, albeit for a limited amount of time.

 

Consumer Behaviour: Seeking Stability Amid Economic Uncertainty

As economic uncertainty looms, more homeowners are prioritising stability. According to a recent survey by the Building Societies Association (BSA), nearly 40% of homeowners have indicated they are willing to lock in fixed-rate deals for longer terms to secure peace of mind. This trend is expected to continue in 2024 and 2025 as borrowers seek predictability in a volatile market.

 

Key Trends in Remortgaging to Watch in 2024 and 2025

As we look toward the next two years, several key trends will shape how homeowners approach remortgaging. These trends reflect broader economic conditions, changing consumer needs, and innovations in the financial services sector.

Interest Rates and Fixed vs. Variable Rate Choices

One of the most significant factors influencing remortgage decisions in 2024 and 2025 is the ongoing fluctuation of interest rates. Homeowners will need to carefully consider whether a fixed or variable rate is more appropriate for their circumstances.

Fixed vs. Variable Rates:

• Fixed-rate mortgages: As the economy faces uncertainty, many borrowers are opting for fixed-rate deals, locking in interest rates for the long term (typically 5 years). Fixed rates provide stability and help homeowners avoid future rate hikes. However, as of 2024, these rates are higher than in previous years due to the current inflationary environment. You should always consider your own personal circumstances when deciding what length of fixed rate is suitable for your needs.
• Variable-rate mortgages: These mortgages offer flexibility as the rate changes in line with the Bank of England base rate. While this can result in lower initial rates, borrowers are exposed to potential rate increases.

 

Prediction: Experts predict that interest rates will stabilise by the second half of 2025, but they are unlikely to return to pre-2022 levels for some time.

The Rise of Specialist Remortgaging Products

As the remortgage market becomes increasingly complex, specialist mortgage products are gaining traction. These include Sharia-compliant mortgages and self-employed remortgaging solutions.

Key Areas of Growth:

• Islamic Finance: With more demand for Sharia-compliant financing, brokers are increasingly facilitating remortgages for Muslims who wish to adhere to Islamic law. These products are growing in popularity as awareness and demand increase in the UK market.
• Self-Employed Mortgages: The rise of gig economy workers and self-employed individuals has led to an increase in demand for self-employed remortgaging products, which take into account fluctuating incomes and offer tailored repayment terms.

Prediction: The demand for specialist remortgaging products is expected to rise as more homeowners seek financial solutions tailored to their unique needs.

 

How Consumer Behaviour is Changing

In addition to financial products, consumer behaviour is evolving. Homeowners are becoming more strategic about their remortgaging decisions, with many seeking ways to save money or manage increasing debt.

Homeowners Seeking Stability Amid Economic Uncertainty

In an era of rising inflation and global economic pressures, homeowners are increasingly looking for financial stability. This is driving a demand for longer-term fixed-rate mortgages, which offer a sense of predictability in a fluctuating market.

A survey by MoneySage reveals that 60% of homeowners are prioritising financial stability over flexibility in their remortgaging decisions.

Key Takeaway: With financial uncertainty still in play, many homeowners are opting for the predictability of long-term fixed deals rather than the risk of variable rates.

A Greater Focus on Debt Consolidation

Debt consolidation through remortgaging is becoming more common as rising costs put pressure on household budgets. Many homeowners are using their homes’ equity to consolidate high-interest debts, reducing monthly outgoings and simplifying their finances.

Statistics on Debt Consolidation:

• According to UK Finance, approximately 20% of remortgages in 2024 are expected to be taken out for debt consolidation purposes, a significant increase from previous years.

 

Prediction: The growing focus on debt consolidation will continue to be a major trend in 2024 and 2025, as more homeowners seek ways to simplify their financial obligations. You should think carefully before consolidating debts onto your mortgage, as your home or property may be repossessed if you do not keep up repayments on your mortgage. You should consult a qualified adviser for personalised advice and a personal illustration suitable for your needs.

The Role of Brokers in Securing the Best Remortgage Deals

As the remortgage market becomes more complex, brokers play a crucial role in helping homeowners secure the best deals. Brokers provide access to a wide range of products, negotiate on behalf of clients, and offer expert advice on navigating the evolving market.

The Importance of Broker Expertise in 2024

In 2024, brokers remain invaluable in helping borrowers navigate a market that is influenced by fluctuating interest rates and economic uncertainty. A recent report from the Mortgage Advice Bureau revealed that 75% of homeowners believe brokers provide better deals than going directly to lenders.

Key Reasons to Use a Broker:

• Access to whole-of-market deals: Brokers have access to a wide range of lenders and products that consumers might not be able to find on their own.
• Expert advice: Brokers can help you understand the best time to remortgage, what product is right for you, and how to secure the most favourable rates.

 

Predictions for the 2024-2025 Remortgaging Landscape

Experts predict several changes in the remortgage market over the next two years, including the growing demand for flexible products, specialist remortgaging options, and technological innovations.

Rising Demand for Flexibility in Remortgage Terms

As more consumers embrace flexibility in their financial lives, mortgage lenders are expected to introduce more products with adaptable terms. This includes more competitive shorter-term fixed deals, flexible repayment options, and hybrid products that combine fixed and variable rates.

Key Prediction: By 2025, the demand for short-term fixed products is expected to rise by 20% as more homeowners seek flexibility.

 

Technology and Digital Platforms in Remortgaging

Technology is playing an increasingly important role in the remortgaging process. Digital platforms are making it easier for consumers to compare rates, submit applications, and track their progress. Innovations like AI-powered advice and mortgage comparison tools will make remortgaging more efficient.

Key Tech Trends:

• AI-driven mortgage advice: Tools that use AI to predict the best mortgage products based on your financial situation.
• Online platforms for comparing rates: Platforms like Trussle and Habito are gaining popularity, allowing borrowers to find the best deals quickly.

 

How to Prepare for Remortgaging in 2024/2025

As the remortgage market evolves, it’s essential to prepare to make the most of your remortgage options.

Steps to Improve Your Credit Score

Your credit score plays a crucial role in determining what deals you are eligible for.

The UK remortgaging landscape is set for a significant shift in the coming years. With rising interest rates, changing consumer behaviour, and evolving mortgage products, homeowners and prospective remortgagers must stay ahead of the curve to secure the best possible deal. In this blog, we explore key trends shaping the remortgaging market in 2024 and 2025, offering expert insights on how to make the most of the changing environment.

Research and Compare Mortgage Deals Early

With the potential for changing rates and evolving products, it’s essential to start your remortgaging process well in advance. you should consult with a broker around 3-4 months prior to your deal ending, to ensure there is enough time to review your circumstances, source an eligible deal, recommend and apply on your behalf. The average remortgage application can take 4-6 weeks and many look for an immediate switch intot heir new deal to avoid paying any unnecessary standard variable rate based repayments.

 

Conclusion

The future of remortgaging is shaped by several factors, including interest rates, consumer preferences, and technological advancements. By staying informed about these key trends and seeking advice from experienced brokers, homeowners can navigate the complexities of the remortgaging market and secure the best deal for their financial future. The landscape will continue to evolve in 2024 and 2025, so understanding these changes and preparing ahead of time will give homeowners a significant advantage.