Remortgaging surges as homeowners lock in lower interest rates

REMORTGAGING was pushed to an eight-year high last month as borrowers looked to lock in deals ahead of November’s interest rate rise, and as growth in other forms of credit cooled.

Figures have revealed that £23.1bn was lent for mortgages in October, a 14pc rise on the same time last year.

The remortgaging rush came ahead of the much-trailed rise in rates at the Bank of England on Nov 2, to 0.5pc. This rise is therefore likely driven by homeowners trying to lock in lower interest deals on fixed-rate mortgages ahead of the increase, according to UK Finance, a trade association which combines entities including the British Bankers’ Association.

But new mortgage approvals for house purchases reached 13-month lows. They fell by just over 1,000 to 40,488 in October, down from a sixmonth high of 41,787 in August. House buying and selling has averaged around 100,000 transactions per month this year. UK Finance said that this suggested overall activity in the housing market for 2017 would be in line with that seen since 2014.

First-time buyers in 2017 are making up a much higher proportion of transactions than in previous years, whereas, following new regulations, buy-to-let activity has dropped off. Landlords who are looking to expand their buy-to-let portfolios beyond four or more mortgaged properties may, under rules brought in last month, have to provide evidence of rental income and a business plan to support their mortgage applications.

October also saw a considerable slowdown in consumer credit, while data from high street banks showed businesses were holding off on investment decisions.