Remortgaging hits eight-year high
Remortgage lending reached its highest level for almost eight years after hitting £7.1bn in July, according to data from LMS, as switching was boosted by the UK’s vote for Brexit.
The July figure was up by more than a quarter (27%) from £5.6bn in June and is the largest amount since October 2008: 42% higher than July last year, when £5.0bn of loans were made.
The number of remortgage loans also increased by 27% from 32,400 in June to 41,157 in July: the most since January 2009. The July total was up by more than a third (36%) year-on-year.
Rising house prices, declining swap rates and speculation about an imminent base rate change at the Bank of England have all contributed to a favourable outlook for the remortgage market, said LMS.
It also noted that homeowners are remortgaging more frequently and are keen to capitalise on the competitive rates currently available.
The term of the average loan that was remortgaged fell by 15% – 9 months – from five years in June to four years and three months in July: the lowest since October 2009, as low rates tempt people to remortgage more frequently.
The surge in remortgaging meant the total amount of housing equity withdrawn via this route in July rose by more than a quarter (27%) from £951.8m to £1.2bn. This was the greatest amount for more than eight years, since £1.4bn was withdrawn in April 2008.
Andy Knee, chief executive of LMS, said: “The aftermath of the UK’s vote to leave the EU has not overshadowed an environment that is ripe for remortgaging as product rates plummeted to new lows. Homeowners have been quick to capitalise on this and there’s little sign that incentives to remortgage will disappear any time soon.
“People who remortgaged in July did so more frequently than they have for more than six years – no doubt to take advantage of low rates in many cases and reduce their outgoings. Feedback suggests almost two-thirds remortgaged in July to take advantage of competitive rates, highlighting that significant savings are ripe for the taking.”