New figures from the Bank of England showed that the number of homeowners remortgaging rose
to a 26 month high in February. With interest rate rises on the horizon, the highest number of loans
approved for borrowers switching to a new deal reached its highest level since December 2008.
Possible interest rate rises the catalyst for the figures
The Bank of England revealed that around 35,725 loans were approved for people switching to a
new deal during in February – a 26 month high.
The Independent reports that ‘the increase is likely to have been driven by expectations that the
Bank of England will increase the base rate from its current record low of 0.5 per cent sooner than
previously thought due to high inflation.’
Despite the rise, the figures remain well below the monthly level of around 100,000 seen before the
credit crunch of 2008.
The Bank of England figures also showed a slight increase in the number of mortgages approved
for house purchase. There were 46,967 mortgage approvals for buyers; the highest level since
November 2010.
Housing market ‘still very weak’
Howard Archer, chief UK and European economist at IHS Global Insight, said: “Despite the modest
pick up in mortgage approvals reported by the Bank of England in February, the housing market
clearly is still very weak which does not bode well for house prices.
“We suspect that house prices will fall by around 5 per cent in 2011 and end up losing around 10 per
cent from the peak levels seen in the first half of 2010.”
The newspaper also reported that figures from the Building Societies Association showed that net
lending by mutuals had remained negative for the 26th consecutive month. Homeowners repaid
£614 million more during February than was advanced in new lending.
