Homeowners remortgage to beat interest rates
Thursday, 24 February 2011 1:11 PM
The UK housing market remained sluggish at the start of 2011, but an increasing number of homeowners are rushing to remortgage their property to ensure they are not caught out by rising interest rates, research suggests.
According to the British Bankers' Association (BBA), the number of home loans approved for house purchases stayed almost completely flat in January, with only marginal improvement from December's two-year low.
At just over 28,900, the figure is considerably lower than the 70,000 to 80,000 monthly approvals associated with a stable housing market.
However, the number of homeowners remortgaging increased by five per cent last month – up 28 per cent on the same month a year earlier – as families rushed to secure a fixed-rate deal before interest rates rise as expected.
The number of UK remortgages exceeded 26,000 in January, just slightly less than November's 16-month high, fuelled by speculation that the Bank of England would boost the base rate to curb over-target inflation.
David Dooks, statistics director at the BBA, commented: "The high street banks have seen more remortgaging activity of late as people look to fix costs."
Interestingly, the news follows Nationwide research released earlier this week which indicated that 75 per cent of homeowners have made no plans about how they will cope if and when interest rates rise.
Net mortgage lending was valued at £1.6 billion last month – approximately half the average 2009 amount.
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