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Consumers ‘fear’ rising interest rates

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Borrowers are rushing to remortgage amid fears over rising interest rates could hit them financially.

Earlier this week figures from LMS showed 46,423 remortgage loans were completed last month. This figure is 89% higher than a year ago, and the largest number recorded since November 2008.

Similar improvements were recorded by the BBA. It found remortgaging nearly 29% up, reaching its highest level for 4 years.

Richard Sexton, director of e.surv chartered surveyors, said many borrowers were fearful of the effect interest rate rises would have. Many were choosing to remortgage now to a fixed rate product.

“A fear of rising interest rates isn’t the only factor that can push remortgaging levels upwards,” he said.

“A positive combination of wage growth, low inflation and healthy house price growth is contributing to a mix of economic good news which is supporting the remortgage sector. Many homeowners now have a much stronger financial footing.

“They are re-assessing their finances and switching to better rates while they can. At the moment, a wide array of record low deals remain, despite some initial withdrawals, and it is these that homeowners are tapping into.”

Sexton said the market mood was positive, but said underlying housing shortages would make it difficult for many to get onto the housing ladder.

“The wider house purchase market is also in good shape, although it remains a struggle for many first-time buyers to put together the deposit they need to get onto the property ladder,” he added.

“This will remain the case until wage growth fully catches up with house price growth, and in that respect there is still a long way to go. In the meantime, financial support schemes like Help to Buy remain important tools to maintain healthy momentum at the bottom of the market.”

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