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Borrowers seek to remortgage after six months to avoid further rate rises

  • 07/04/2022
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Borrowers seek to remortgage after six months to avoid further rate rises
Searches for homeowners wanting to remortgage after just six months climbed by 30 per cent in February, according to data released by Legal and General Mortgage Club (L&G).

The jump in these searches compared to Janaury suggests rises in the Bank of England’s base rate to curb inflation could be prompting borrowers to lock into low fixed-rate deals sooner, the club said.

The data comes from L&G’s Smartrcriteria tool, which tracks product searches from over 8,000 advisers, shedding light on mortgage borrower trends.

February’s data showed that the buy-to-let market was still seeing growing demand despite rising inflation, with searches for first-time landlords rising by 23 per cent month-on-month. Searches for those with corporate lets also grew by 28 per cent.

However, with house prices shooting up to record highs, the bank of mum and dad is becoming increasingly vital for borrowers, as searches for those with gifted equity climbed by 119 per cent. Searches from landlords with gifted equity followed this trend, climbing by 15 per cent.

Searches by advisers for borrowers with gifted deposits similarly increased by six per cent, suggesting that the cost-of-living squeeze has resulted in first-time buyers needing a bigger deposit for completion.

L&G’s data also suggests that families could be looking to alternative options to either minimise their monthly outgoings or free up cash to help their loved ones with a deposit as house prices rise and the Help to Buy scheme enters its final year. The club suggested this was indicated by a 33 per cent rise in searches for interest-only mortgages.

Kevin Roberts, director at L&G Mortgage Club (pictured) said: “The cost-of-living squeeze and rising interest rates are clearly driving borrowers to remortgage and lock into low fixed-rate products that are still available on the market.

“Others are exploring alternative means of managing their finances, perhaps by taking out interest-only mortgages. Whether borrowers are looking for alternative solutions or simply want to lock into a fixed-rate mortgage for the future to keep their monthly repayments low while ensuring they have a mortgage that continues to meet their needs.

“As advisers seek to support many of their clients to find new mortgages, technology remains key to processing these requests quickly and efficiently. Research tools that consider criteria, affordability, and products are useful to intermediaries.”

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