As speculation of a rising interest rate continues, a report released by the British Bankers’ Association indicates that the number of people applying for a mortgage is at its highest in the last seven years.

According to the data, borrowing during August this year increased by 14 per cent to £12.2bn, the largest increase since 2008. The number of mortgages being approved has also soared, with a 23 per cent increase in comparison to last year. Re-mortgaging reached its highest level in the last four years, with figures 38 per cent higher.

The BBA’s chief economist, Richard Woolhouse, said that the low interest rates were responsible, with people securing their funds in property. However, the threat of a rise in the Bank of England base rate means that more people are looking for cheap deals while they are still available. The number of competitive deals is also acting as an incentive for people looking to secure a cheap mortgage. Thanks to the competition, the average fixed rate deal for someone re-mortgaging is now 2.57 per cent, according to Moneyfacts, the consumer site.

A number of banks have also branched out into riskier areas, seeking higher returns. The interest-only mortgage is being re-introduced by some banks, including the RBS. However, despite the increased competition among lenders, the rates for deals are slowly creeping up again, causing borrowers to snap up the best offers.

If you are looking for a deal, you are advised to seek professional guidance from someone who has passed their CeMAP training.

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