Mortgage deals on rise amid rate fears
The number of people remortgaging rose to a 26-month high during February as homeowners braced themselves for higher interest rates, figures have revealed.
Around 35,725 loans were approved for people switching to a new deal, the highest level since December 2008, according to the Bank of England.
The increase is likely to have been driven by expectations that the bank will increase the base rate from its current record low of 0.5% sooner than previously thought due to high inflation.
The speculation prompted people who had been sitting on their lenders' standard variable rate to remortgage before rates rise.
Despite the increase, remortgage levels are still running at well below the more than 100,000 approvals a month that were seen before the credit crunch struck.
There was also a slight increase in the number of mortgages approved for house purchase at 46,967, the highest level since November last year, but still significantly below the 70,000 to 80,000 approvals a month that are thought to be consistent with a stable housing market.
Net mortgage lending, which strips out redemptions and repayments, fell to £1.2bn in February, down from £1.9bn in January, although this was slightly up on the recent six-month average.
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 market clearly is still very weak, which does not bode well for house prices."
Consumer credit was more buoyant than it has been in recent months, with £768m of unsecured debt being taken on.
Within the total, credit card borrowing increased by £450m, broadly in line with the recent trend, but borrowing through loans and overdrafts jumped by £672m - the second biggest increase since July 2008.
Meanwhile, figures from the Building Societies' Association showed that net lending by mutuals had remained negative for the 26th consecutive month, with homeowners repaying £614bn more during February than was advanced in new lending.
Savings balances held by mutuals edged ahead by £150m, an improvement on the previous month when customers withdrew £697m more than they deposited.