Latest figures from Accord have shown the number of borrowers remortgaging has doubled year-on-year over the past two months.
The lender is urging advisers to act fast and encourage clients to benefit from “record low” mortgage deals before interest rates begin to rise.
Accord claims that analysts believe the historically low mortgage rates and fierce competition as more lenders move back into the market following the 2008 credit crunch has created a favourable market for those looking to renew their home loans, with hints of a base rate rise from Bank of England Governor Mark Carney perhaps encouraging home-owners into acting now whilst these conditions prevail.
The Yorkshire Building Society Group figures, of which the intermediary-only lender Accord is part, saw sizeable growth in remortgage business during June, July and August, with remortgage applications in July 127% higher than the same month in 2014. The same figure for August was 87%, whilst remortgages in June were 18% more than the previous year. Year-on year the Group saw a 70% increase in mortgage applications during the three month period.
Mortgage rates were at a record low during July according to Moneyfacts, when the average two-year fixed mortgage rate fell by 0.16 percentage points at the start of July, to 2.76% at the beginning of August, the lowest rate on record. Higher LTV mortgages were at the forefront of reductions, although loan sizes across the market saw substantial rate cuts.
“With Bank of England Base Rate at a record low for so long it would be no surprise if some borrowers have become complacent about mortgage rates, especially when it seemed that they just kept on falling,” said David Hollingworth, associate director of communications, at London & Country Mortgages.
“However, some mortgage rates have ticked up slightly and, as the discussion around a Base Rate rise intensifies, more borrowers are bound to review their situation.
“The mortgage market remains highly competitive and many will find that they can cut their mortgage rate by switching to a fixed rate, which could slash their monthly payment as well as offering protection against any potential rise in interest rates.”
Accord said the increase in remortgaging could be a reaction to Governor Mark Carney’s hint on 16 July that interest rates could rise by the end of the year, coupled with current lucrative mortgage deals.
David Robinson, Accord’s national intermediary sales manager, said: “It has been a summer of remortgaging. People are getting nervous that the base rate could be on the up, with mortgage rates following suit, and this is reflected in our figures.
“Homeowners have enjoyed the choice of low-value loans for several years, and we are still in the period of extremely low rates. This won’t last forever, which is why now is an ideal time to ask clients who are on already their lender’s standard variable rate, or who are coming to end of the fixed rate portion of their mortgage, if they are considering remortgaging.
“Despite pundits speculating when a rate rise may occur, Mark Carney stated the exact timing cannot be predicted in advance. That’s why brokers need to help their clients to be financially savvy and look at whether they would be better off locking into a fixed rate now whilst market conditions are still very favourable to borrowers.”