HOMEOWNERS locked themselves into attractive mortgage deals in the weeks leading up to August’s Bank of England base rate rise, according to a household finance report. Gross mortgage lending for the total market in July stood at £24.6 billion, 7.6 percent higher than a year earlier, figures from trade association UK Finance show.
The Bank of England base rate increased from 0.5 percent to 0.75 percent on August 2 following speculation that rates would be hiked, pushing up costs for some mortgage borrowers on variable rate deals.
UK Finance also said credit credit card spending was 8.1 percent higher than a year earlier, reflecting an uplift in retail sales amid the warmer weather and the World Cup.
Peter Tyler, director at UK Finance, said: “July saw steady growth in gross mortgage lending, driven largely by re-mortgaging as home owners locked into attractive deals in anticipation of the recent base rate rise.
“Card spending has also strengthened, reflecting increased expenditure during the holiday period and an uplift in retail sales due to the World Cup and warm weather.
“However, the broader economic outlook remains mixed, with households continuing to see their incomes being squeezed by rising inflation.
“This may explain the shift towards deposits held in instant access accounts, as consumers opt to keep their money close to hand.”
The figures also show personal deposits grew by 1.2% over the previous 12 months.
Deposits held in instant access accounts were 3.8% higher than a year earlier, suggesting people want to keep their money close at hand if needed.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Lenders remain keen to lend and offer competitive products, particularly in the re-mortgage space.
“With other incentives such as cashback increasingly being offered to those re-mortgaging, combined with fears of further potential rate rises, we expect this area of the market to remain particularly strong in coming months.”