Bank of England Interest Rate Hike Spurred Surge in Remortgaging

Britons rushed to lock in cheap home loans late last year as the Bank of England increased interest rates for the first time in more than a decade.

U.K. lenders said that remortgaging jumped significantly in the fourth quarter of 2017 — with results from a central bank survey suggesting the biggest increase in demand for at least a decade. BOE officials voted to increase rates to 0.5 percent from a record-low 0.25 percent at their November meeting — a decision that had been well-trailed by policy makers.

The average rate on a fixed two-year mortgage with a 75 percent loan-to-value ratio — the most popular home loan — rose 6 basis points to 1.61 percent in November, the highest in more than a year, according to BOE data. The rate was as low as 1.35 percent as recently as April.

The BOE Credit Conditions Survey published Thursday also showed there were signs consumers may be starting to pull back on some forms of borrowing. While demand for credit-card lending was broadly unchanged in the quarter, that for other unsecured lending was said to have fallen significantly, the first material decline since 2015.
Source: Bloomberg