Mortgages  

Just one in five think mortgage rates will increase

Just one in five think mortgage rates will increase

Remortgagers are becoming increasingly sceptical about a mortgage rate increase, according to LMS research.

Data published today by conveyancer LMS showed the proportion of remortgagers who believe interest rates will rise has decreased by three percentage points from 25 per cent in December 2015 to 22 per cent in January.

A poll of 1,054 respondents to a LMS customer survey in January 2016 suggested the possibility of Brexit delayed a rate increase, with the proportion of people expecting one has dropped by 8 per cent since January 2015.

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This scepticism has not dissuaded homeowners from remortgaging their propertes, with 65 per cent taking advantage of low rates.

Of those who remortgage, 29 per cent increased the size of their loan, 7 per cent used the money to pay off other debts, 1 per cent helped a child purchase a property and 20 per cent spent the extra income on home improvements.

More than eight out of 10 people deciding to remortgage chose to switch lenders.

There was a five percentage point rise from 41 per cent in December to 46 per cent in January 2016 in the number of people opting to use brokers or mortgage advisers in the remortgage process

Adviser View

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “Expectations of an interest rate rise have been kicked into the long grass, and the prospect of a cut in interest rates has reared its head as markets worry about the global economy and the lack of firepower in central banks’ armoury.

“The concern is borrowers are getting used to such low rates and are going to get a nasty shock when interest rates do finally rise.”