Fears that the Bank of England will soon raise the base rate from its all-time low is driving a rise in the level of remortgaging.
This is according to research from property service company LMS, which says that three in 10 current remortagagors fear an interest rate rise.
LMS found that record amounts of cash were released by homeowners in August, while total lending was up 20% year on year to £4.2 billion. Two-thirds of those remortgaging said they were doing so to take advantage of low mortgage rates.
Andy Knee, chief executive of LMS, said: “Competitive offers and the threat of a base-rate rise continues to drive remortgaging activity as winter approaches, even though an increase before the end of the year now appears unlikely.
“That said, it is better for borrowers to take the necessary measures in good time rather than be caught off guard when rates do rise. Consumers are certainly abreast of base rate speculation as it becomes am increasingly common topic of discussion.”
Knee warned, however, that many newer borrowers had never experienced higher mortgage rates. “It remains worrying that we have a new generation of borrowers who have not experienced anything other than record-low rate mortgages, and who may be ill-placed to adjust when rates do rise,” he said. “But hopefully the affordability requirements within the Mortgage Market Review will lessen this impact.”