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Remortgaging level at 26-month high

Remortgaging rates increased in February to the highest level in the last 26 months as homeowners made preparations for a rise in interest rates, figures have indicated.

The Bank of England said that approval was given for 35,725 loans to be switched to a new deal during the month, the highest amount since December 2008.

A rise in numbers is believed to have been triggered by the expectation that high inflation will drive the Bank of England to raise the base rate from the record low of 0.5 per cent sooner than previously anticipated.

Speculation over a potential increase has led people who had been sitting on their lenders' standard variable rate to remortgage before an increase in rates is implemented.

Despite the rise, the number of remortgages that were approved is still 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 £1.2 billion in February, down from £1.9 billion in January, although this was slightly up on the recent six month average.

Copyright © Press Association 2011

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