Remortgagors coy over rate increases
Activity in the remortgage market has spiked in recent months, but the survey conducted by LMS suggested that people are looking for a cheaper rate now rather than being scared of future rises.
Two-in-three people are moving to take advantage of lower rates, compared to the fifth of people who want to protect themselves against future rises.
Remortgaging activity is now at the highest level since November 2008, with the average rate now at 2.56%. More than a third (37%) of people who completed a remortgage saved more than £500 per month from their mortgage payments, LMS found.
The number of remortgage loans completed in July was 46,423, 47% higher than in June. The value on these loans increased by a similar amount, growing 41% month-on-month to reach £7.2bn.
Andy Knee, chief executive of LMS, said messages from policy makers were not the reason for the increase in remortgages, instead people were looking for a better rate.
“It is surprising that so few remortgagors were expectant of an interest rate rise, given the volume of speculation since Mark Carney’s announcement last month,” he said.
“The Black Monday crash and volatile markets have now most likely postponed an interest rate rise by a few months, so those looking to capitalise on record-low interest rates can breathe a sigh of relief.
“However, we shouldn’t forget that the Base Rate cannot be kept on hold forever and the Bank of England is pushing towards a tighter monetary policy. There is no reason why homeowners should stall; now is the opportune moment to make the most of competitive rates and we anticipate a continued flurry of activity among homeowners keen to take advantage of this and reduce their monthly outgoings.”