Remortgaging in the UK Soars at 7-Year High of £6.4bn
The value of remortgage lending in the UK has increased 48% year on year and is the largest amount recorded since November 2008, according to new data.
The figures from conveyancing firm LMS also show that the number of borrowers remortgaging exceeded 39,300 and is the highest since July 2009 while affordably improved markedly with typical remortgage repayments falling to a record low.
This represents a 36% increase from the £4.7 billion recorded in March and a 48% uplift from April 2015’s figure of £4.3 billion.
The number of remortgage loans also increased by 41% from 28,000 in March to 39,353 in April. This is 47% 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%, a record low, down from 18.4% the previous month.
Andy Knee, chief executive of LMS, pointed out that March saw the market overwhelmed by second home owners and buy to let investors looking to push through transactions before changes to stamp duty came in, but as April arrived, existing home owners 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. Home owners 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,’ he said.
But he also pointed out that the forthcoming referendum on the UK’s place in the European Union will continue to dominate headlines until the vote on 23 June which could have an impact on the mortgage rates that banks offer as well as household finances if the result is to leave.
The data also shows that mortgage interest rates fell to 2.49% in March, down from 2.51% in February and 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% 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% to 16.7% month on month, a record low.
Average mortgage payments as a percentage of income also fell, from 21.2% to 19.7% between February and March, but this remains 3% more than remortgage costs.