Almost three in ten re-mortgagors now believe interest rates are going up, according to findings from LMS. A customer survey reveals that the number of re-mortgagors who anticipate rate rises has increased significantly in the last six months, from 16% in February to 28% in August. In contrast, just 2% of re-mortgagors believe interest rates will fall, down from 4% in July.

The assumption that interest rates will rise is driving re-mortgage activity among borrowers keen to take advantage of record-low rates before a base rate hike, with lending up 20% year-on-year in August to £4.2bn.

In addition, almost two in three people re-mortgaging in August did so to take advantage of lower mortgage rates. Nearly two in five (37%) of borrowers took advantage of low mortgage rates to reduce their monthly payments by up to £500, with 4% reducing monthly payments by more than £500. Just 3% of re-mortgagors were incentivised to stay by their lenders, while 76% opted to switch.

Re-mortgagors also withdrew record amounts of cash from their homes in August with 30% seeking to increase the size of their loan. Over 20% increased the size of their loan by more than £20,000.