MortgagesSep 30 2015

Remortgage rush ahead of rate rise fears: Accord

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Remortgage rush ahead of rate rise fears: Accord

The number of borrowers remortgaging has doubled year-on-year over the last two months, according to figures from intermediary lender Accord.

Parent Yorkshire Building Society published figures which show “dramatic growth” during the summer, with remortgage applications in July 127 per cent higher than the same month last year.

The same figure for August was 87 per cent, while remortgages in June were 18 per cent more than the previous year.

Year-on-year the group saw a 70 per cent increase in mortgage applications during the three month period.

David Robinson, national intermediary sales manager at Accord, called it a summer of remortgaging, as people get nervous that the base rate could be on the up, with mortgage rates following suit.

“Homeowners have enjoyed the choice of low-value loans for several years, and we are still in the period of extremely low rates.

“This won’t last forever, which is why now is an ideal time to ask clients who are on already their lender’s standard variable rate, or who are coming to end of the fixed rate portion of their mortgage, if they are considering remortgaging.”

Accord analysts believe the historically low mortgage rates and competition from more lenders moving back into the market, has created favourable conditions for those looking to renew their home loans, with hints of a base rate increase from Bank of England governor Mark Carney encouraging home-owners into acting now while these conditions prevail.

David Hollingworth, associate director for communications at London and Country Mortgages, commented that with the base rate at a record low for so long it would be no surprise if some borrowers have become complacent about mortgage rates, especially when it seemed that they just kept on falling.

“However, some mortgage rates have ticked up slightly and, as the discussion around a rate rise intensifies, more borrowers are bound to review their situation.

“The mortgage market remains highly competitive and many will find that they can cut their mortgage rate by switching to a fixed rate, which could slash their monthly payment as well as offering protection against any potential rise in interest rates.”

Mr Robinson added that brokers need to help their clients to look at whether they are better off locking into a fixed rate now whilst market conditions are still very favourable to borrowers.

At the end of last week, Accord launched two three-year fixed rate remortgage deals, both with a rate of 2.29 per cent and available at 80 per cent loan-to-value.

Earlier this month, the Council of Mortgage Lenders estimated gross mortgage lending reached £20bn in August, with its chief economist Bob Pannell stating much of the growth came on the back of a pick-up in remortgage activity over the summer months.

peter.walker@ft.com