Speculation over interest rate rises increases levels of remortgage applications

Countrywide report that speculation surrounding base rate rises has seen remortgage applications rise.  Remortgages made up 32 per cent of all mortgage applications in January, an increase of 5 per cent on the previous month’s applications.  Three out of the top ten mortgages applied for through Countrywide’s 650 strong network of mortgage consultants were remortgage products.  Customers, on average, provided a deposit of 32% giving them an average interest rate of 3.26 per cent.
The average deposit required for the top ten most popular mortgages in January was 22 per cent, overall, with an average interest rate of 4.24 per cent showing the difference between remortgage and house buying transactions.
Showing that the current speculation is affecting customers’ decisions, fixed rate products made up 84 per cent of all mortgage applications in January — a 9 per cent increase on the previous month, which saw fixed rate products reach their highest level since August 2009. 
Commenting, Grenville Turner, Chief Executive of Countrywide, said:
“The growing popularity of fixed rate mortgage products is a telling sign that many are prepared to pay slightly more to give themselves peace of mind and stability with regards to their outgoings.
Overall, the reality is that for the last 2 years only those that have had to move have done so. Discretionary movers, who typically make up somewhere around half of all transactions are beginning to evaluate whether this is now the time to make a move.”
Grenville added:
“The government has set targets to increase business lending to small and medium sized enterprises; it would be equally valuable to the economy if a deal could be struck with top lenders to help buyers gain affordable mortgage finance.
I hope the government’s First Time Buyer Summit held earlier this week addresses these key issues to incentivise and stimulate the market. An immediate move to remove stamp duty on properties up to £250,000 would be a positive start.”
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