Remortgaging spikes as borrowers act before rates rise

Remortgaging spikes as borrowers act before rates rise

Remortgaging soared by 20 per cent on an annual basis in September ahead of an expected rise in interest rates next month.

UK Finance’s high street banking statistics showed remortgaging approvals were 29,570 in September – well above the monthly average of 25,577 over the past six months.

The data comes amid the biggest maturity period in five years, with more than £35bn-worth of mortgages due to mature in September and October, according to CACI’s Mortgage Market Database.

It also coincides with the possible end of record-low mortgage interest rates, with many lenders upping the cost of borrowing ahead of an expected rise in the Bank of England's base rate on Thursday 2 November.

The UK Finance figures showed house purchase approvals dipped slightly in September but remained stronger than the monthly average of 41,006 and 7 per cent higher than in September 2016.

Other advances were up 5 per cent year-on-year.

UK Finance’s senior economist Mohammad Jamei said: “As we near the end of 2017, our data is showing that housing market activity has built up modest momentum since the start of the year, helped by an increase in first-time buyer numbers.”

Despite the positive data, gross mortgage lending is estimated to have dropped by nearly 12 per cent to £21.4bn in September.

Nearly two-thirds of the lending - £13.7bn – was carried out by high street banks, down slightly on August’s £14.5bn but up by 9 per cent on an annual basis.

John Bagshaw, corporate services director of Connells Survey & Valuation, said: “Having benefited from a decade of low interest rates, consumers are sensing the risk that this era is nearing an end. 

“Many older mortgage deals are expiring this autumn which will mean moving onto more expensive standard variable rates. As a result, homeowners on these deals are opting to refinance, taking advantage of the intense competition in the mortgage market right now. 

“With so much economic uncertainty and hints of a base rate rise, many are choosing to lock into a lower rate to see them through the next few years.”