Re-mortgages surge in race for ultra-low borrowing rates

38,042 re-mortgage loans with a total value of £6.4 billion were approved in July

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Re-mortgages surge with in race for ultra-low borrowing rates

The number of people re-mortgaging in July jumped to its highest level since 2008 as home-owners rushed to lock into ultra-low borrowing rates before they disappear.

Bank of England figures show that 38,042 re-mortgage loans with a total value of £6.4 billion were approved in July, marking the highest number of loans for this purpose recorded since November 2008.

Meanwhile, the number of loans approved for home-buyers lifted to a 17-month high. Lenders approved 68,764 mortgages for house purchase in July, with a collective value of £11.6 billion.

Howard Archer, chief UK and European economist for IHS Global Insight, described the figures as "compelling evidence" that housing market activity is firming up.

He said: "It is possible that July's performance may have been lifted by some house-buyers looking to move quickly to try and lock in a low mortgage interest rate before they start rising."

A mortgage price war had broken out between lenders, with many slashing the rates on their deals to the lowest they have ever offered. But there have recently been some signs of lenders starting to tweak their rates upwards.

In July, Bank of England governor Mark Carney suggested that the base rate could start to increase from its 0.5% low around the turn of this year.

Mr Archer said that, with a limited stock of properties generally for home buyers to choose from, he expects house prices to increase at a "solid pace" over the final months of 2015 and during 2016, adding: "Specifically, we expect house prices to rise by 6% over 2015 and then by a similar amount in 2016."

The Bank's figures also show that credit card lending increased by £376 million in July, which was the highest rise seen in three months.

Borrowing on personal loans and overdrafts increased by £797 million, which the Bank said is in line with the average figure seen over the previous six months.

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