Homeowners are stampeding to lock in low mortgage rates ahead of a feared move by the Bank of England to raise the cost of borrowing next month.
The number of remortgage deals surged by 11.3 per cent in February to a total of 35,400, representing new loans worth £6 billion, according to figures from industry body UK Finance.
The figures were released as official data showed average earnings rose 2.8 per cent in the three months to February, up from 2.6 per cent in the previous quarter and the fastest rate for two and a half years.
Economists said the acceleration made it more likely that the Bank’s Monetary Policy Committee will order a rate rise in May. The rate is expected to be raised 0.25 per cent to 0.75 per cent after being at 0.5 per cent or below since March 2009. The pound surged to a post-Brexit referendum high against the dollar this morning in anticipation of higher rates before slipping back a little.
Craig McKinlay, sales and marketing director at brokers Kensington Mortgages said: “Prudent borrowers are now locking themselves into competitive mortgage deals that remain on offer through the mortgage market.”
Jackie Bennett, director of Mortgages at UK Finance, said: “Remortgages are up year on year as homeowners look to fix costs.” Mortgage rates are starting to drift up, with the average two-year fix at 2.43 per cent, up from 2.32 per cent a year ago.
The figures from UK Finance showed that home purchases, including movers and first-time buyers, reached 50,000, the highest for February since 2007. First-time buyers completed 25,200 mortgages, a rise of 2.4 per cent, and totalling £4 billion.
The 2.8 per cent earnings rise means that wages are outstripping inflation for the first time in a year. TUC general secretary Frances O’Grady said: “Unions have negotiated pay rises for workers across the UK, from the counters at McDonald’s to the factory floor at Ford. But wage growth is still weak. Workers are £14 a week worse off than they were in 2007 with pay packets not expected to return to their pre-crisis level until 2025.”
Today’s data from the Office for National Statistics also showed unemployment fell by 16,000 between December and February to 1.42 million. The rate of 4.2 per cent, down from 4.3 per cent in the previous quarter, is the lowest since the three months to May 1975.