Number of re-mortgage deals increase by a third in June

Homeowners snapping up cheap deals while they last

Updated: 

House prices

The number of home owners taking out 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 in June, marking an increase of a third both compared with the previous month as well as June 2014, the Council of Mortgage Lenders (CML) reported.

Meanwhile, 28,300 first-time buyers took out £4.2 billion worth of mortgages in June, marking a 22% increase in the number of people taking their first step on the property ladder compared with May.

Competitive mortgage rates mean that first-time buyers were paying a record low proportion of their monthly household income in June to service their mortgage payments, the CML said.

First-time buyers were paying 18.2% 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% 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 home owners, 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.

"After a slower than expected start to the year, lending now appears to be picking up."

A mortgage price war in recent months 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% low around the turn of the year.

Mortgage experts have already seen some signs of lenders starting to increase the rates on loans on the market in recent weeks.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: "There is more re-mortgaging activity which comes as no surprise given recent comments from the Bank of England over interest rates.

"A few lenders have increased their fixed-rate pricing but there are still plenty of excellent deals available and will continue to be as lenders compete for business."

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