Remortgaging has surged as the prospect of an interest rate rise leads homeowners to lock in better deals.
The number of people switching to lower rates was 29 per cent higher in July than in the some month last year, figures released yesterday by the British Bankers’ Association (BBA) showed.
“Savvy homeowners are snapping up competitive deals before an expected increase in interest rates,” said Richard Woolhouse, chief economist at the BBA.
The Bank of England was expected to lift rates off their record lows around March next year, but this is now not expected until next summer as cheap commodities weigh on inflation. Intense competition between lenders has also helped drive down borrowing costs.
“A fear of rising interest rates isn’t the only factor that can push remortgaging levels upwards. A positive combination of wage growth, low inflation and healthy house price growth is contributing to a mix of economic good news which is supporting the remortgage sector,” said Richard Sexton, director of e.surv chartered surveyors.
“Many homeowners now have a much stronger financial footing. They are re-assessing their finances and switching to better rates while they can. At the moment, a wide array of record low deals remain, despite some initial withdrawals, and it is these that homeowners are tapping into.”
Jody Baker, head of money at comparethemarket.com said: “It appears that rumours of an early interest rate rise have helped intensify mortgage lending in a significant way.
“Our site has seen a 23 per cent spike in remortgage queries in July, as people rush to secure the best deals they can before possible rate rises kick in. Furthermore, there are early signs that the property market is starting to heat up again.”