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End of 2021 saw ‘remortgaging flurry,’ Bank of England data shows

There was a ‘flurry of remortgaging’ at the end of 2021, as the number of homeowners refinancing properties reached its highest level in nearly two years. 

Approvals for remortgages rose to 44,500 in November, according to the latest Bank of England data.

This was the highest number of remortgage approvals recorded since before the pandemic in February 2020, when 52,500 homeowners remortgaged.

On the agenda: The number of homeowners remortgaging their properties hit a nearly two-year high in November 2021, and experts say many more will be planning to refinance in 2022

This figure only captures those remortgaging with a different lender, rather than taking a new deal with their existing bank or building society, so the true number will be far higher.  

The Bank of England also reported that borrowers were paying the lowest interest rates it had ever recorded in November 2021.

The ‘effective’ rate on newly drawn mortgages fell 9 basis point to 1.5 per cent in November, while the rate on the outstanding stock of mortgages ticked down 1 basis point to a new low of 2.02 per cent.

This figure is set to rise, as the Bank increased the base rate from 0.1 per cent to 0.25 per cent on 16 December. 

This has already driven up rates, with the lowest available now at 1.11 per cent compared to lows of as little as 0.83 per cent last year, though experts predict they will remain relatively low in historical terms.

Remortgaging record in 2022? 

Experts said the remortgaging trend was set to continue in 2022, as rates remained relatively low.

Jamie Thompson of Manchester-based Jamie Thompson Mortgages, said: ‘The end of 2021 saw a flurry of remortgages as people looked to secure historically low rates.

‘With the amount of competition in the mortgage market, I expect low rates to continue, with lenders given peace of mind about values by the sheer lack of supply.

Andrew Montlake, managing director of London-based independent mortgage broker, Coreco, added: ‘Enquiry levels remained robust right up until Christmas as people looked to take advantage of low rates and protect themselves against a potential rising rate environment.

‘We’re expecting 2022 to be a record year for remortgage activity with a huge amount of borrowers coming to the end of their existing mortgage products, all of whom will be keen to fix in early to the lowest rates available.’ 

Many borrowers will be coming to the end of two and five-year deals, having fixed amid robust property markets in 2017 and 2020.

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Market ‘normalising’ after exceptional two years 

Data on borrowing for new home purchases showed the market returning to ‘normality’ after the stamp duty holiday ended on 30 September.

Approvals for house purchases, an indicator of future borrowing, flatlined in November at 66,964; just 139 fewer than in October 2021.

This was the lowest figure recorded since June 2020 (40,500), but it was close to the 12-month average up to February 2020 of 66,700 and the ten-year average of 65,534.

The overall borrowing figures, which include borrowing for both purchases and remortgages with new lenders, also reflected a return to a more stable housing market.  

Net mortgage lending has fluctuated in recent months, thanks to the stamp duty holiday

Net mortgage lending has fluctuated in recent months, thanks to the stamp duty holiday

Net mortgage lending has fluctuated wildly in the past few months. It more than doubled from £4.4billion in August to £9.5billion in September, according to the Bank of England, before plummeting to £1.1billion in October.  

However, in November, net mortgage borrowing returned to a more stable level of £3.7billion. 

The Bank said September’s unusually high figure, and October’s unusually low one, were down to borrowers pushing through purchases in September to take advantage of the stamp duty holiday.

Borrowers could save up to £15,000 in stamp duty between July 2020 and the end of June 2021, and then £2,500 between then and the end of September 2021. 

This helped to drive up house prices, however, with the latest estimate from Nationwide suggesting they were 10.4 per cent higher in December 2021 than in December 2020. 

Joshua Raymond, director at financial brokerage XTB, said: ‘Whilst the jump from October to November may seem at the outset huge, it mostly reflects a return to normal lending levels given October’s purchases were brought forward to take advantage of the stamp duty holiday before it expired fully.

‘What we are starting to see now is extenuating circumstances being flushed out of the data, and in the coming months we will get a much better picture of the state of the UK housing market.’

Net borrowing in November was £2.9billion below the 12-month average to June 2021, when the full stamp duty holiday was in effect, the Bank of England said.

Gross lending increased to £22.1billion in November, from £19.5billion in October, while gross repayments rose to £19.4billion from £18.2billion in October.

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