Remortgaging hits nine-year high

Remortgaging hits nine-year high

Remortgaging surged to a nine-year high ahead of the Bank of England’s decision to raise interest rates.

The latest seasonally adjusted data from the central bank showed remortgaging surged to 51,593 in October – up from 48,133 the previous month and well ahead of the monthly average for the previous six months of 45,670.

It is the highest level of remortgaging since October 2008.

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The surge came amid expectations the BoE’s monetary policy committee would raise the base rate of interest from its historic low of 0.25, pushing up the cost of borrowing.

On 2 November, the MPC confirmed the base rate would increase to 0.5 per cent.

Lea Karasavvas, managing director of London-based Prolific Mortgage Finance, said: “You can almost smell the panic in the air. Homeowners were literally falling over themselves to remortgage in October as the rhetoric from the Bank of England reached fever pitch. 

“It’s a fine example of the wisdom of the crowd, as the public put pen to paper in greater numbers than at any time since the crash, and just in the nick of time.”

But as remortgaging levels surged, there was a drop in the number of loans for house purchase, from 66,111 in September to 64,575.

This means mortgage approvals for new house purchases reached their lowest levels since September 2016.

The data showed total mortgage approvals were 129,885 in October – ahead of the average of 126,397 for the previous six months.

In last week's Budget Chancellor of the Exchequer Philip Hammond pledged £44bn of investment over the next five years to ramp up housebuilding.

He also scrapped stamp duty completely for first-time buyers on properties worth £300,000 or less.

John Phillips, Just Mortgages and Spicerhaart group operations director, said: “The opportunities that remortgages will provide to brokers in the coming months cannot be overstated. The budget announcements might have been good for first-time-buyers, but supply is still a big problem.  

“Although the government’s plans are admirable, we cannot build new houses overnight. Until more homes get into the supply chain, there is little opportunity for many homeowners to move up that chain. Advisers will need a good back book, and contact strategy, if current levels are to be sustained.”