Remortgaging has hit record levels with a 22% increase in activity recorded in October, according to the latest figures from the Council of Mortgage Lenders (CML).
Remortgaging accounted for 43% of total lending in October, while lending for house purchase remained steady, indicating that activity inside the housing market is now driving it.
Michael Coogan, director general of the CML, said: ‘Total lending rose again in October, not least because remortgaging is running away. It seems highly likely that most people who are remortgaging may also be releasing equity, contributing to the Bank of England’s concerns that equity withdrawal is fuelling consumer spending. The situation is unlikely to resolve until house price inflation begins to slow down. In the mean time, borrowers need to remember that although mortgages are cheap at the moment, inflation will not reduce their debt burden as quickly as it did in the past.’
The CML has suggested that refinancing is proving increasingly popular because the average rates of interest on new deals dropped again, with the average new fixed rate falling to 4.9% compared to 5.12% in September, and the average new variable rate dropping to 4.28% from 4.42% in the previous month.