The amount of people remortgaging in June soared as landlords and homeowners grab the low interest rates before the Bank of England increases borrowing costs.
In the next six months, a rise in borrowing rates is looking more and more likely. According to the Council of Mortgage lenders, in June the value of remortgages rose by 34 per cent to £5.1bn, as homeowners wanted to take advantage of the low rates.
In contrast, people who were moving house took out £6.4bn worth of loans, which was up seven per cent year-on-year and the amount that first-time buyers borrowed remained at £4.2bn.
Landlords also took advantage of the low rates as buy-to-let remortgages totalled £1.8bn, which increased by 64 per cent on the previous year. New buy-to-let loans hit £1.4bn in June, rising by 40 per cent.
The CML’s director-general, Paul Smee, said: “Notable this month is the uptick in remortgage 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, and not just a distant theoretical possibility.”
In July, Mark Carney said that rates could rise at the turn of the year, and a member of the Monetary Policy Committee voted in favour of a rate increase last week.
Banks typically increase mortgage rates before before official rates rise. This is because they price long-term loans based on forecasts.