Re-mortgaging surged in July as home owners flocked to beat interest rate rise

Home owners have flocked to beat rising interest rates – as the residential re-mortgaging market has recorded its strongest July in over a decade.

There were 46,900 new home owner re-mortgages completed in July, up by 23.1% on the same month a year earlier, figures from trade association UK Finance show.

In total, £8.7 billion-worth of re-mortgaging took place in July – a 26.1% increase year-on-year.

Following speculation about interest rate hikes over the summer, the Bank of England base rate increased from 0.5% to 0.75% in August, pushing up costs for some home owners on variable rate deals.

Jackie Bennett, director of mortgages at UK Finance, said: “The residential re-mortgaging market saw its strongest July in over a decade, as home owners pre-empted the latest Bank of England rate rise by locking into attractive fixed-rate deals.”

The figures also show there were 14,700 new buy-to-let remortgages completed in July, 7.3% more than in the same month a year earlier.

Meanwhile, 31,400 new first-time buyer mortgages were also handed out in July – 1% up on July 2017.

The average first-time buyer is 30 and has a gross household income of £42,000.

Ms Bennett said the “considerable” growth in buy-to-let re-mortgaging shows “that while recent tax and regulatory changes are impacting on new purchases, many existing landlords remain in the market”.

She continued: “The number of first-time buyers has returned to modest year-on-year growth.

“However, affordability remains a challenge for many prospective borrowers, underlining the importance of clarity over the future of schemes such as Help to Buy.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “August’s interest rate rise was well-flagged in advance, with many borrowers taking the opportunity to re-mortgage onto a fixed rate and save themselves from a hike in mortgage payments.

“Lenders continue to court re-mortgage business into the autumn, with Barclays one of a number of banks cutting pricing on its re-mortgage products.

“On the buy-to-let side, re-mortgaging is also proving popular, with landlords keen to maximise as much profit from their portfolios as possible to offset increased tax charges.

“The sector has not lost its appeal to many existing landlords but taking a close look at how portfolios are run is a smart move.”