Sharp rise in remortgaging approvals

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by Gill Montia

Mortgage lending rose by £0.8 billion in November, with the rate of increase falling back from £1.2 billion in October but remaining slightly above the previous six-month average of £0.7 billion.

The number of approvals for house purchases stood at 48,019 – volumes were up slightly on October and held their own against a previous six month average of 48,145.

Meanwhile, approvals for remortgaging surged ahead to 34,262, compared with 30,429 in October, and a previous six-month average of 28,210.

The shift suggests that some homeowners are not convinced of predictions by Nationwide and others that the base rate could remain at 0.5% throughout 2011.

They may, in fact, be aware of a recent interview given to The Daily Telegraph by the Bank of England’s executive director for markets, Paul Fisher, who stated that rates need to return to a “normalised” position of around 5%.

Mr Fisher, who is a member of the Bank’s rate-setting Monetary Policy Committee, also told the newspaper that a “new mindset” might need to be adopted by the UK’s mortgage borrowers, when it comes to interest rates.