Homeowners are failing to lock into low repayment rates by switching from a standard variable rate mortgage to a fixed rate mortgage, research by high street bank Halifax has shown.
Although housing transactions in 2014 exceeded the one million mark for a second consecutive year, and fixed rates continue to fall below the standard variable rate, remortgaging activity remains subdued, it added.
Halifax said that fixed rate mortgages were around 100 basis points below standard variable rates mortgages from August 2012 to December 2014.
Despite this, activity in the housing refinance market remains historically low, with an average of 31,900 remortgage transactions per month since summer 2012.
The Bank of England cut its benchmark interest rate to 0.5 per cent in March 2009, heralding a period of ultra low borrowing costs. While remortgaging remains low compared to the years before this, there are signs activity is picking up.
Remortgaging activity bounced back in January to reach its highest level in seven years as homeowners according to separate research by property services group LMS.
"Remortgaging activity remains subdued particularly compared to the strong market activity in 2008. For more than two years the gap between standard variable rate and fixed rate mortgages has grown, with the latter falling to record lows."
“Current growth projections in the February Inflation Report support the expectation for a first interest rate rise towards the end of 2015, though uncertainty around the timing remains high. It is therefore surprising to note that more people are not taking advantage of the low rates on offer and fixing their mortgage.”