Homeowners rush to remortgage ahead of interest rate rise

Homeowners have rushed to remortgage ahead of interest rate rises, with a 30% spike in June compared with numbers in May. Remortgaging now stands at its highest level since 2013. Over the course of June, 31,600 households changed their mortgage deals, while a total of 24,300 did so in May.

The numbers from the Council of Mortgage Lenders also show house purchase lending in June saw a substantial month-on-month increase, with over 20% more loans being advanced to purchase a house compared with May. The rise in the number of loans for house purchase in June was driven by both first-time buyers and home-movers.

Gross lending in June totalled £20.1bn (€28.3bn, $31.4bn), up 25% on May and 13% up on June 2014. This meant in the second quarter, gross lending came to £52.2bn, up 17% on the previous quarter and a 2% rise on the second quarter 2014.

Paul Smee, director general of the CML, said: "Notable this month is the uptick in remortgage activity among home-owners, perhaps reflecting an increased desire to lock into competitively priced mortgage deals in advance of any rise in rates. It is likely that people are now beginning to feel a rate rise is a realistic prospect, and not just a distant theoretical possibility. After a slower than expected start to the year, lending now appears to be picking up as we expected, and in line with our recently revised forecast."

The Bank of England recently warned interest rates could begin to increase as soon as December, although the City expects the first rise to come in 2016, the BBC reported.