Remortgage approvals jump to nine-month high

Remortgaging approvals jumped to a nine-month high in August as home owners locked themselves into attractive deals while interest rates increased, a report has found.

Some 30,868 re-mortgage loans were approved in August – the month the Bank of England base rate was increased from 0.5% to 0.75%, pushing up costs on some variable rate mortgages.

The total was the highest since 33,375 remortgage deals were approved in November 2017.

The figures, released by trade association UK Finance, also show that 39,402 mortgage approvals were made to home buyers in August, slightly down on 39,619 in July.

Peter Tyler, director at UK Finance, said: “Remortgaging continued to dominate in August, as home owners took advantage of a competitive market to lock into attractive deals.

“Growth in card spending remained fairly strong, reflecting the boost to retail sales from the warm weather as well as the growing use of credit cards as a preferred means of payment.

“However, the overall economic outlook remains mixed as household incomes continue to be squeezed by rising inflation.”

The report said credit card spending was 7.6% higher in August than a year earlier, with outstanding levels on card borrowing growing by 5.8% over the year.

Outstanding overdraft borrowing was 7.2% lower compared with the same time last year.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “With the number of mortgages for house purchase down in August, this may partly explain why a number of lenders continue to cut the cost of their best mortgage deals, despite last month’s interest rate rise.

“With many would-be buyers holding off making a decision until Brexit is resolved one way or another, lenders are battling for a relatively small pool of borrowers and are having to reduce rates accordingly.

“Barclays, HSBC, Halifax and TSB are among the big names to have reduced the cost of fixed-rate mortgages recently, and we expect this trend to continue as lenders try to boost business before the end of the year.”