The Bank of England’s Money and Credit report showed that approvals for remortgaging activity to a new lender rose by 1,600 to 38,400 in December.
Mark Harris, chief executive of SPF Private Clients, said the rise in remortgages suggested that borrowers were coming off low rates and “shopping around for the best rate possible rather than opting for the ease of sticking with their existing lender”.
Simon Webb, managing director of capital markets and finance at LiveMore, said the remortgaging trend was expected to continue and “bring with it serious affordability concerns for many borrowers moving from a historically low pandemic rate to a current rate”.
He added: “For borrowers approaching or in retirement, this issue is even more pertinent, given the affordability challenges that already exist for the age group. At LiveMore, we believe many of these challenges can be addressed by using lending models that take a more holistic view of income and are designed to support brokers in identifying appropriate mortgage solutions for their clients.”
Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, said: “Close to one million five-year fixed rate deals are coming up for renewal this year, so those homeowners will be bracing for higher repayments unless they’ve managed to pay down their mortgage balance – though they have largely missed the worst of the mortgage crisis.”
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The figures showed that the average interest rate on newly drawn mortgages fell from 4.2% in November to 4.15% in December, while the rate on outstanding mortgages rose slightly from 3.9% to 3.92%.
Haine said this rise in the pricing of outstanding mortgages dealt a “blow” to borrowers who secured historically low rates before they started to increase at the end of 2021.
Gross mortgage lending up slightly
The Bank of England’s figures showed that gross mortgage lending rose £500m to £23bn, while there was a £600m drop in gross repayments to £18.8bn.
The net borrowing of mortgage debt by individuals was flat at £4.6bn, as was the growth rate of net mortgage lending, which stayed at 3.4%.
