Rate rise fear prompts a rush to remortgage
Borrower motivation to remortgage has hit its highest level since the financial crisis amid expectations the Bank of England is to raise interest rates again in May, according to conveyancer LMS.
Remortgage deals jumped after the Bank of England raised interest rates last year for the first time in a decade, according to data.
The number of remortgages leapt by more than a third in December to almost 40,000 from 28,400 in same period in 2016, data from LMS showed.
At the same time, demand for variable remortgages dipped 2% to a new low.
Impending rate rises
The trend is set to continue in 2018, as monetary policymakers prepare to again lift interest rates, with expectations of a May hike.
More than eight in 10 borrowers now expect an imminent rise, according to LMS.
Nick Chadbourne, chief executive of the business, said: “We are still in a ‘settling-in’ period – borrowers and lenders have yet to fully acclimatise to the current situation.
“The talk of further base rate increases will no doubt continue to stimulate the market over the coming weeks.”
He added: “In this busy climate, all the stakeholders in the mortgage industry need to do what they can to make the borrowing process as simple and straightforward for consumers as possible.”
Data also showed the popularity of two-year fixed rate remortgage deals has lifted, rising from a low of 20% of remortgages in October 2017 to 23% in November and December.
Chadbourne said: “Even with the new interest rate environment driving the popularity of five-year – rather than two-year – fixes, we’ve still seen an increase in their popularity recently.”