It's been a great few months for homeowners and prospective buyers alike, with mortgage rates at record lows and the number of competitive products available at levels never seen before. So it would make sense that homeowners currently sitting on their lender's standard variable rate (SVR), or those approaching the end of a fixed rate deal, would consider remortgaging – and LMS has the figures to back it up.
The figures show that monthly gross remortgage lending has hit its highest level since 2009, with the total value of remortgages advanced standing at £6.1bn in October. This is 20% higher than the £5.1bn recorded in September and is up a significant 49% year-on-year, with £4.1bn of loans recorded in October 2014.
Furthermore, the last time monthly remortgage lending topped £6bn was in January 2009, when the same figure of £6.1bn was recorded, which just shows how much this sector of the market is recovering. The number of remortgage loans saw similar rises, with a total of 37,744 advanced during the month – an increase of 22% on a monthly basis (up from the 31,000 recorded in September) and up 40% year-on-year (27,000).
Remortgaging truly is coming into its own, and when you consider the amount that can be saved, it's little wonder. We recently reported on HSBC figures showing that a typical homeowner on their lender's SVR could save an impressive £4,000 a year by remortgaging to a low cost deal, and when you consider that you can get a two-year fixed mortgage for as little as 1.19% with the right deposit, far lower than the current average SVR of 4.82%, you really could save a small fortune.
Many borrowers are even taking the opportunity to remortgage and release some equity from their home, with the total amount of equity released standing at £1.1bn during October, up 13% on a monthly basis and a massive 141% more than the £454m recorded in October last year. It marks the second time this year that equity withdrawal has topped £1bn, with the same £1.1bn recorded in June; prior to that, equity withdrawals hadn't reached such levels since May 2008 (£1.2bn).
Andy Knee of LMS said that remortgaging was "back with a bang, and rightly so as borrowers capitalise on the competitive offers currently available". He added that there's scope for this activity to increase further, with remortgage lending still nowhere near pre-recession levels, "showing that there is plenty of capacity for continued growth over coming months and years.
"We have all the right conditions in place for a remortgage resurgence, [with] the general increase in all segments of the lending market further underpinned by a general sense of economic prosperity, [and we now] await the release of the Autumn Statement to gauge whether there will be a change in housing policies which could impact activity in the New Year."
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