Last month was the best May for remortgaging since 2008, new figures from LMS show, due to an increasing number of homeowners taking advantage of the competitive mortgage market to secure a brand new deal.
The figures show that remortgage lending reached £5bn in May, marking the strongest May for remortgaging since 2008 when £10.4bn of lending took place. It also marks an increase of 26% on an annual basis, and it's a similar story in terms of the number of remortgage loans advanced – the total stood at 32,334, again higher than every May since 2008 and representing a significant annual rise of 31% (up from 24,700 in May 2015).
Things aren't quite so rosy when looking on a monthly basis – the value of remortgages advanced fell by 16% from April, while the number dipped by 7% – but as it said in the report, April was "an exceptional month" for remortgaging, so the drop wasn't unexpected.
However, not only are people taking advantage of the low mortgage rates that can be achieved by remortgaging, but many are also using it as an excuse to release some of the cash tied up in their homes, with strong growth also recorded in terms of the amount of equity released.
Indeed, the total amount of equity withdrawn rose by 33% month-on-month to total £1.09bn – which also represents an annual rise of 64% and is again the strongest May since 2008 – equating to an average of £33,691 withdrawn per customer. This also marks a strong monthly increase of 43% from April, and it'll no doubt give those customers a very welcome cash injection.
But will this high level of remortgaging activity continue? Given recent events, we just don't know, as LMS chief executive Andy Knee explains: "The favourable mortgage market, with eagerly competitive lenders, record low rates and rising house prices, provided the ideal background for remortgaging to continue its year-on-year surge. [However], 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.
"There will be some uncertainty and volatility to cope with as everyone absorbs the news, and this is likely to put a dampener on the housing market at least until the autumn. However, interest rates remain at historically low levels, and for those with a mortgage now is a great time to take out a fixed rate and stabilise their financial outgoings. Lenders may well come under pressure and their appetites for new business may shrink in the short term; if they do, the range of excellent rates available today might not be around for much longer, so fixing now may be a smart move."
Make the most of the market and guard against uncertainty with a fixed rate mortgage
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