High interest rates causes increase in remortgaging

Posted: 08 Jun 2007 11:01:11 GMT

The rising cost of mortgage repayments has resulted in an increase in remortgaging activity, it has been claimed.

The rising cost of mortgage repayments has resulted in an increase in remortgaging activity, it has been claimed.

While the Bank of England's decision yesterday to hold the base rate at 5.5 per cent will come as a welcome relief to many homeowners, previous increases appear to be already prompting many to reassess their household finances.

According to Spicerhaart Financial Services, the number of remortgages increased by 50 per cent in May, with many borrowers seeking out fixed-rate deals for fear of further rate rises.

The company's research also shows that remortgaging made up 28 per cent of the mortgage market in May - up ten per cent on April's figure.

"Rising interest rates have pushed up mortgage repayments and put a strain on consumer finances," commented Steve Cox of Spicerhaart Financial Services.

"This has resulted in a substantial rise in the proportion of borrowers choosing to remortgage their property to secure future monthly outgoings."

Mr Cox added that the Bank of England's decision not to raise rates was the right one, saying that further increases would significantly damage the mortgage market.

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