Rise in re-mortgage deals put down to competitive rates
THE number of home owners arranging re-mortgage deals jumped by a third in June as people looked to snap up cheap loans before they disappear.
Some 31,600 re-mortgage loans, with a collective value of £5.1 billion, were handed out at the beginning of the summer, and the number is also a third up on last year over the same period, the Council of Mortgage Lenders (CML) reported.
Meanwhile, 28,300 firsttime buyers took out £4.2 billion worth of mortgages in June, marking a 22 per cent increase in the number of people taking their first step on the property ladder compared with May.
Competitive mortgage rates mean first-time buyers were paying a record low proportion of their monthly household income in June to ser vice their mortgage payments, the CML said.
First-time buyers were paying 18.2 per cent of their income in repayments in June, marking the lowest percentage since the CML started tracking the figures in 2005.
Meanwhile, home movers spent about 17.9 per cent of their gross monthly household income on paying their mortgage, which is also the lowest proportion seen since the CML started tracking data 10 years ago.
Paul Smee, director general of the CML, said: “Notable this month is the uptick in re-mortgage activity among homeowners, perhaps reflecting an increased desire to lock into competitively-priced mortgage deals in advance of any rise in rates.
“It is likely that people are now beginning to feel a rate rise is a realistic prospect.
“After a slower than expected start to the year, lending now appears to be picking up.”
A mortgage price war has led to many mortgage lenders offering their cheapest-ever rates.
But last month, Bank of England governor Mark Carney suggested the base rate could start increasing from its historic 0.5 per cent low at the turn of the year.
Mortgage experts have already seen some signs of lenders starting to increase the rates on loans.