Homeowners rushed to remortgage in July amid signs that fixed-rate mortgages are now starting to creep up in price.
Remortgaging jumped 29% in July to its highest level for four years, according to new figures from the British Bankers’ Association (BBA).
Borrowers continue to lock in to fixed rates to maintain control of their mortgage costs, the BBA said.
Overall remortgage approvals in July were 15% higher than a year ago, while house purchases rose 11%.
Richard Woolhouse, chief economist at the BBA, said: “Savvy homeowners are snapping up competitive deals before an expected increase in interest rates.
“There were concerns that new regulations had made applying for a mortgage more onerous. But remortgaging is still a straightforward process.”
Charlotte Nelson, finance expert at Moneyfacts.co.uk, said the cost of fixed-rate mortgages is already starting to creep up.
“The average two-year fixed rate has increased from 2.76% at the start of August to 2.82% today, while five-year fixed rate deals have also risen, increasing from 3.24% to 3.29% over the same period.
“This goes to show that we do not necessarily need a base rate rise to see rates move upwards. Borrowers therefore need to act fast to secure the remaining record-low deals on the market, as these offers will not last forever.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “While fixes aren't quite as cheap as they have been, they are still almost ridiculously low when looked at from an historical perspective and are likely to remain competitive as lenders compete for business in the second half of the year.”
Harris said tougher affordability criteria are making it harder for some people to remortgage with brokers seeing increased demand from concerned borrowers.
Brian Murphy, head of lending at Mortgage Advice Bureau (MAB), said: “China’s financial crisis may have now thrown doubt over when we can expect a base rate rise, but homeowners still stand to save significant amounts by switching to one of the record low rates available on the market.
““Several lenders did increase their pricing in July, so if borrowers are in a position to make a long-term commitment, a fixed rate can protect against future rises.
“It’s unlikely that today’s rates are going to be around for much longer: locking in now will extend the life of record low rates and maintain savings for as long as possible.”