Remortgaging surges in July as homeowners pre-empt interest rate rise
The number of homeowners remortgaging their houses spiked to its highest level in more than a decade in July, amid a rush to lock in fixed-rate mortgage deals leading up to the latest Bank of England rate rise.
Roughly 46,900 new homeowner remortgages were completed in July, rising 23.1 per cent compared with the same month a year earlier, according to new data from UK Finance.
First-time buyer mortgages completed in July also edged one per cent to 31,400, underlining evidence that the market for buyers looking to get on the property ladder has returned to modest year-on-year growth.
Today's data suggests that the rise in remortgages jumped in the run-up to the Bank of England's decision in early August to raise the interest rate from 0.5 per cent to 0.75 per cent – the highest level since March 2009.
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"This is the strongest remortgaging market for a decade, presumably driven by borrowers who want to lock into current low interest rates before they rise further. However, this is unlikely to have much effect on the housing market, since it’s not money that will be used for buying a house," according to Mike Scott, chief property analyst at estate agent Yopa.
Kevin Roberts, director of Legal & General Mortgage Club, added: "Increased innovation coupled with competitive solutions continues to drive the mortgage market forward, with the number of products surpassing 5,000 for the first time in over a decade. Meanwhile, government schemes like Shared Ownership and Help to Buy are giving thousands of first-time buyers that extra bit of support they need to secure their first home."
Roberts said: "However, we all need to be prepared for potential changes in the market that may lie ahead. Regardless of the Bank of England’s decision tomorrow, the era of low interest rates will not last forever."
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Jackie Bennett, director of mortgages at UK Finance, commented: "There was also considerable growth in remortgaging in the buy-to-let sector, showing that while recent tax and regulatory changes are impacting on new purchases, many existing landlords remain in the market."