UK sees “best May for remortgaging since 2008”

The UK has just seen the best May for remortgaging since 2008, according to research from LMS.

Monthly gross remortgage lending reached £5bn in May 2016, up by more than a quarter (26 per cent) from May of last year.

It is down by 16 per cent from April, which was an exceptional month for remortgaging. The number of remortgage loans also decreased month-on-month – by 7 per cent – from 34,800 in April to 32,334 in May. However, this is still 31 per cent more than May 2015 when 24,700 borrowers remortgaged.

The average amount of equity withdrawn per customer from remortgaging activity rose 43 per cent month-on-month, from £23,479 in April to £33,691 in May. The average amount of equity withdrawn is also up by a quarter in comparison to May last year when equity withdrawn stood at £26,863.

The total amount of equity withdrawn rose by a third (33 per cent) over the last month from £817m to £1089m in May. This was also 64 per cent more year-on-year, from the £664m recorded in May 2015. This is also the highest amount of total equity withdrawn since May 2008.

“The favourable mortgage market, with eagerly competitive lenders, record low rates and rising house prices provided the ideal background remortgaging to continue its year-on-year surge,” comments Andy Knee, Chief Executive of LMS.

“We will have to wait and see what the impact of June’s Brexit decision on the housing and mortgage markets will be in the short and medium term,” he adds. While short-erm uncertainty will prove an obstacle, he notes that interest rates remain at historically low levels.

“For those with a mortgage now is a great time to take out a fixed rate and stabilise their financial outgoings.”

Remortgagers brace for Brexit by lowering rates

20th June 2016

Remortgagers in the UK are bracing for a possible Brexit this week, by lowering their rates.

More than half of people remortgaging in May (56 per cent) took advantage of the competitive products available to lower their mortgage rate, according to research from LMS. A third of remortgagors (32 per cent) were able to reduce their monthly outgoings by up to £500, while the number remortgaging to increase the size of their loan rose 2 percentage points from 24 per cent to 26 per cent. The number increasing their loan by more than £10,000 also increased in May to 19 per cent, up 3 percentage points from a low of 16 per cent in April.

The rush to remortgage follows activity hitting a seven-year high in April, as people prepare for the possibility of rates rising, should the UK vote to leave the EU on 23rd June.

“With an uncertain economic climate, knowing what your mortgage payment will be for five years is a very seductive offering for many remortgagors,” comments Andy Knee, Chief Executive of LMS.

Financing, though, has rarely been so affordable in the UK, encouraging more people to remortgage regardless of their feelings towards the UK’s referendum.

“Increased competition between lenders, record low rates and rising housing equity have come together to provide homeowners with a setting that is ripe for remortgaging,” adds Knee. “Many savvy borrowers are taking advantage of the current climate and we expect activity to maintain its momentum.”

Remortgaging hits seven-year high in UK

26th May 2016

Remortgaging has reached a seven-year high in the UK, new figures reveal.

A report from LMS shows that monthly gross remortgage lending rose to £6.4bn in April 2016, the largest amount since the £7bn recorded in November 2008 more than seven years ago.

This represents a 36 per cent increase from the £4.7bn recorded in March and a 48% uplift from April 2015’s figure of £4.3bn.

The number of remortgage loans also increased – by 41 per cent – from 28,000 in March to 39,353 in April. This is 47 per cent more than April 2015 when 26,700 borrowers remortgaged. This is the greatest number since July 2009 when 39,500 remortgaged.

Low interest rate has resulted in mortgage affordability improving sharply. Now remortgage payments as a percentage of income are at 16.79 per cent, a record low, down from 18.4 per cent the previous month.

The rise is backed up by data from the BBA, which shows that remortgaging approvals were 16 per cent higher in April 2016 than in April 2015.

Dr Rebecca Harding, BBA Chief Economic Advisor said: “As expected, growth in mortgage lending has fallen back sharply on last month proving that March’s results were just a Stamp-Duty spike. Net mortgage borrowing is nevertheless 3 per cent higher than a year ago.”

Andy Knee, Chief Executive of LMS, adds: “Remortgaging in April has bounced back after a quiet March, with levels of activity taking place that haven’t been seen since the recession. March saw the market overwhelmed by second home-owners looking to push through transactions before changes to Stamp Duty came in, but as April arrived, existing homeowners were able to remortgage and capitalise on the great rates currently available.

“The average amount people are withdrawing through remortgaging fell to a 13-month low, suggesting household budgets are not as constrained as previously. Homeowners can also celebrate that – as a result of such low mortgage rates and rising incomes – repayments as a percentage of income have fallen to a record low, boosting family finances.”

Mortgage interest rates fell to 2.49 per cent in March, down from 2.51 per cent in February. The sum of annual remortgage repayments fell from £8,593 in February to £8,344 in March as a result of lower interest rates, while average household income rose by 7 per cent from £46,605 to £50,000 in the same period. This meant that annual remortgage repayments as a percentage of income fell from 18.4 per cent to 16.7 per cent month on month – a record low.

“The subject of Brexit will continue to dominate headlines until the 23rd June – and possibly after – which could have an impact on the mortgage rates that banks offer as well as household finances,” notes Knee. “Fixing now means you can rest assured of a competitive rate and make substantial savings to your outgoings each month.”

Remortgaging in UK tops £6 billion

25th February 2016

Remortgage in the UK topped £6 billion in January 2016 for the first time in seven years.

New figures from LMS reveal that monthly gross remortgage lending rose to a high of £6.2 billion at the start of the new year, a rise of 49 per cent from £4.2 billion in December 2015.

This is the largest value of remortgage lending in a month since November 2008, when £7 billion worth of loans was recorded.

The monthly growth is partly a seasonal uplift, as spring cleaning spreads to personal finances as well as people’s living rooms, but a number of other factors are driving the trend.

Indeed, interest rates remain at all-time lows at the start of 2016, which means that homeowners can save a significant sum by remortgaging their home. They are certainly not starved of choice: according to the National Mortgage Index from Mortgage Advice Bureau, consumer choice of mortgage products has reached a near-eight-year high, with 17,132 products available on the market in January – the highest since March 2008.

Combined with house prices, Andy Knee, Chief Executive of LMS predicts that even after any short-term rush ahead of the looming Stamp Duty hike in April, growth is expected to continue.

“Mark Carney’s indication that the Base Rate will stay low for a while longer means borrowers will continue to enjoy great rates. On top of that, the shadow of a Brexit and global economic uncertainty looms on, precluding a Base Rate rise. However it would still be advisable for savvier borrowers to lock into low rates to maximise their cost savings,” he adds.

Per customer, the average amount of equity withdrawn through remortgaging fell from £30,361 in December 2015 to £25,955 in January 2016. However, this is still the largest amount recorded in the month of January as borrowers take advantage of rising house prices and competitive rates. The average withdrawal was also 36 per cent higher than January of last year (£19,021).