"Recent cuts may mean that rates don’t have that much further to fall, but even so, there are significant savings to be had in terms of monthly repayments."
With the exception of two-year variable products at 75% LTV, Bank of England data shows average mortgage rates were lower across the board in July than was the case in May before the EU referendum took place – with many falling to record lows.
For the first time since tracking began in December 2014, LMS data shows that there were higher expectations of interest rates falling than rising in July. Among the 13% of remortgagers who expected rates would change in July, almost two in three (59%) expected rates would fall – compared with just 18% who felt this way in May and 29% in June, when the EU vote took place.
Despite widespread speculation over the economic impact of the UK’s vote to leave, the July data from LMS also shows little sign of a drop in consumer confidence in the remortgage market. The percentage of remortgagers increasing the size of their loan rose from 26% in May to 28% in July, while the percentage increasing their loan by more than £10,000 was unchanged from May at 19%.
Andy Knee, Chief Executive of LMS, commented: “The aftermath of the vote to leave the European Union has seen many mortgage rates tumble to record lows: a fact that has not been lost by homeowners as many seek to take advantage of low rates. July’s figures show many people were keen to press ahead with plans to remortgage, regardless of growing speculation that a base rate cut might be on the cards.
“The Bank of England’s reduction of the 0.5% base rate to 0.25% is likely to offer an extra incentive to anyone considering remortgaging. Recent cuts may mean that rates don’t have that much further to fall, but even so, there are significant savings to be had in terms of monthly repayments. The prospect of an extra £200 or more to spare in their monthly budget will give many homeowners reason to weigh up their options over the summer.
“Despite uncertainty in the immediate aftermath of the referendum, the property market very much remains open for business. The shabby savings rates on offer mean that, when it comes to raising money for home improvements or clearing other debts, many people will naturally consider the wealth they have gained as a result of sustained house price rises.”
