Borrowers remortgage after just six months to avoid further rate hikes
Searches for homeowners wanting to remortgage after just six months climbed by 30% in February, according to data released by Legal and General Mortgage Club (L&G).
The jump in these searches compared to January suggests rises in the Bank of England’s base rate to curb inflation could be prompting borrowers to lock into low fixed-rate deals sooner, according to L&G.
Its Smartrcriteria tool, which tracks product searches from over 8,000 advisers, shedding light on mortgage borrower trends, also revealed that the buy-to-let market in February was still seeing growing demand despite rising inflation.
Searches for first-time landlords rose 23% month-on-month while searches for those with corporate lets also grew by 28%.
However, with house prices reaching record highs, the bank of mum and dad is becoming increasingly vital for borrowers, as searches for those with gifted equity climbed by 119%. Searches from landlords with gifted equity followed this trend, climbing by 15%.
Searches by advisers for borrowers with gifted deposits similarly increased by 6%, suggesting that the cost-of-living squeeze has resulted in first-time buyers needing a bigger deposit for completion.
L&G’s data also suggested families may be looking to alternative options to either minimise their monthly outgoings or free up cash to help their loved ones with a deposit as house prices rise and the Help to Buy scheme enters its final year.
The club based this on data which showed a 33% rise in searches for interest-only mortgages.
Kevin Roberts, director at L&G Mortgage Club, said: “The cost-of-living squeeze and rising interest rates are clearly driving borrowers to remortgage and lock into low fixed-rate products that are still available on the market.
“Others are exploring alternative means of managing their finances, perhaps by taking out interest-only mortgages. Whether borrowers are looking for alternative solutions or simply want to lock into a fixed-rate mortgage for the future to keep their monthly repayments low while ensuring they have a mortgage that continues to meet their needs.”