British banks have reported a 20% rise in remortgage activity in the year to September, as borrowers look to lock into cheap deals before November’s expected interest rate rise.
UK Finance said that banks approved 29,570 remortgages in September, well up on the monthly average of 25,577 over the previous six months and 20% higher than in September 2016.
The trade body said that 41,584 mortgages were approved by banks in September, up from 38,822 last year but slightly down from August’s figure of 41,762.
UK Finance estimates gross mortgage lending in September to be £21.4 billion, 5% higher than a year ago. Nearly two-thirds of this lending – or £13.7 billion – was carried out by High Street Banks.
Mohammad Jamei, UK Finance’s senior economist, said: “As we near the end of 2017, our data is showing that housing market activity has built up modest momentum since the start of the year, helped by an increase in first-time buyer numbers.
“Rising inflation continues to put pressure on household budgets which is impacting consumer spending. Consumer credit growth has edged up a little compared to last month, but is in line with annual growth rates over the last year.
“Businesses remain cautious about the future amidst an uncertain economic environment, reflected by their growing deposit activity and a dip in their borrowing growth rate.”
With the Bank of England hinting that it could raise interest rates for the first time in a decade in order to curb inflation, economists are predicting there will be a hike in November.
The expected rate rise has led to many borrowers remortgaging to take advantage of the low rates currently on offer.
Jeremy Duncombe, director of Legal & General Mortgage Club, said: ““Borrowers are clearly continuing to take advantage of a favourable, low rate environment by remortgaging ahead of a potential base rate rise.
“Lending has continued to grow year-on-year and despite referendums, Brexit and a general election, we are seeing robust levels of activity at a similar pace to that in 2016.”
