Consumers in rush to remortgage
The mutual said that it had received 70% more remortgage applications this summer compared to last year. It said many borrowers were looking to take advantage of low rates, with other preparing themselves for future interest rate rises.
Applications in June were 18% higher than last year while July saw a 127% rise, this trend continued to August when 87% more households remortgaged than a year ago.
Across all three months, the number of successful remortgages was 70% above the levels recorded in 2014.
Data provided by Moneyfacts showed that the average two-year fixed rate fell by 0.16% to reach 2.76% at the start of August.
While these were often for borrowers with larger deposits, those across the market had seen some benefit.
Brendan Gilligan, product manager for Yorkshire Building Society, said: “Remortgaging has been a key activity this summer – we have seen a huge upsurge in the numbers of borrowers wanting to renew their mortgage. It seems that record-low mortgage rates, combined with the looming spectre of a Bank of England base rate rise has created conditions which have encouraged homeowners to think about looking at their existing mortgage and seeing if they can get a better rate.
“We would encourage any borrowers who are either on their lender’s standard variable rate, or who are coming to the end of the tie-in period for their current mortgage, to shop around and look to see if they can find a cheaper mortgage which is suitable for them.
“There have been some very strong hints from the Bank of England that a base rate rise could be around the corner, so it’s perhaps worth considering if you would be better off over the next few years by fixing your rate now.”
Rachel Springall, finance expert at Moneyfacts, said: “Mortgage rates have been at record lows this year, but since the murmurings of a base rate rise, it is expected that the lowest deals won’t be around forever. This expectation can lead to a surge of customers looking to get a better deal right now, so they don’t miss out.”
“It’s a great time to get a low-rate deal, but borrowers must always take into account the true cost of the mortgage, including any fees and incentives.”