According to the Bank of England’s latest lending statistics, 28 per cent of mortgages for owner occupiers in the last three months of 2021 were remortgages
Homeowners rushed to remortgage at the end of 2021 in a bid to avoid rising interest rates, official data has revealed.
According to the Bank of England’s latest lending statistics, 28 per cent of mortgages for owner occupiers in the last three months of 2021 were remortgages.
This was the highest share seen since the start of the pandemic and represented a 10 percentage point rise annually, according to analysis by Hargreaves Lansdown.
A total of £27.3billion of remortgages were agreed, the highest in three years.
This was despite overall mortgage lending, including both mortgages and remortgages, totalling only £70.2billion – the lowest figure since autumn 2020.
Interest rates on mortgages have been climbing since late 2021, when the Bank of England increased the base rate from 0.1 per cent to 0.25 per cent.
The base rate, which heavily influences mortgage pricing because it affects banks’ own borrowing costs, subsequently increased to 0.5 per cent in February 2022.
Andrew Montlake, managing director of the UK-wide mortgage broker, Coreco, said: Unsurprisingly, there is a stampede to remortgage and lock into the lowest possible fixed rates at present, before rates inevitably increase further.
The average two and five-year fixed rates have increased for the fifth consecutive month, rising 0.21 and 0.17 percentage points respectively, according to financial information service Moneyfacts.
At 2.65 per cent, the typical two-year rate was the highest Moneyfacts had recorded since November 2015.
This means those coming off two-year fixes may find their new mortgage more expensive than their previous one.
The five-year average rate of 2.88 per cent was the highest since April 2019, Moneyfacts said.
Gareth Lewis, commercial director of property lender MT Finance, said: The Bank of England figures suggest a cooling of the market in the fourth quarter of last year, which is not surprising given the frenetic pace of activity over the previous 18 months.
He said: That pace was not sustainable and with double-digit house-price growth pricing first-time buyers even further out of the market, a more reasonable pace, similar to pre-pandemic levels, is welcome.
