Remortgage market continues to grow

Market for remortgages in UK continues to grow at fast rate with 53,624 remortgages in May, up from 52,745 in April.

Arutz Sheva Staff,

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The market for remortgages in the UK continues to grow at a fast rate with 53,624 remortgages in May, up from 52,745 in April, according to reports from LMS.

Whilst there are several reasons for the growth in remortgaging, one key factor has been the role of HM Land Registry allowing people to sign mortgage deeds online, making the process easier and indeed faster.

The purposes of remortgages is used by many UK households to get lower rates and avoid being put onto a higher standard variable rate, known as the SVR. Other than getting lower rates, some homeowners use remortgaging to access finance and make overpayments.

A total of 45 per cent of borrowers increased their total loan size when they remortgaged. A further third, 31 per cent, saw no change in the size of their borrowings, while 24 per cent used the opportunity to remortgage to reduce the size of their total debts.

The average loan amount is now £172,000, up from £171,622 the month before. This is part of a longer-term trend where householders borrowing more, although the three-month rolling average has dipped back from its peak seen a year ago.

According to LMS the average homeowners saved £195.09 a month by remortgaging, around 44% of applicants opting for a five-year fixed rate product – also a sign that households want structure and certainty in their mortgage repayments.

For customers increasing their debt, the average loan increase was just over £20,000, while those who reduced their loan did so by an average of just over £10,800.

LMS chief executive Nic Chadbourne says: “Last month saw a sharp increase in remortgage volumes. April and May have been recorded as the busiest months of the year for product expiry rates for the last two years, so these numbers fall in line with market expectations.

“Current volume levels now sit at a 12-month high, revealing that despite wider uncertainty the market is resilient.

“Homeowners are continuing to take advantage of interest rates at near record low levels, with almost half of borrowers now opting for a five-year fixed rate product.”

He says this is part of a trend that has been seen in recent months and it will be interesting to note if it continues into the second half of the year, particularly if economic or Brexit uncertainty increases.

This caution is reflected in the fact that 65 per cent of consumers expect an interest rate rise within the next year.

The LMS report also showed that brokers remain a vital cog in the remortgage process, with 67 per cent of borrowers picking a remortgage product that had been recommended by a broker. This is a slight increase on the 65 per cent figure cited in April’s figures.




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