Remortgaging activity has been surging ahead in recent months, helped in no small part by record low mortgage rates and continued house price rises. This combination is helping homeowners remortgage to a lower loan-to-value (LTV) and save huge amounts on repayments in the process, so it's little wonder that yet another report has revealed a boost in activity.
New data from Connells Survey & Valuation shows that remortgaging activity accounted for 21% of the valuations market in March, up from 15% the year previously and the highest March level for five years, with huge numbers getting in on the remortgaging action. The proportion is also well above the average figure for the month (remortgaging typically accounts for 16% of valuations activity in March), a sharp contrast from the rest of the market.
Indeed, first-time buyer activity during the month was broadly in line with the March average (taking a 32% market share compared with the typical figure of 31%), while home-mover valuations activity dipped (27% vs. the 29% average) and buy-to-let purchase activity halved compared with typical levels (8%, down from 16%).
But why are people flocking to remortgage? Well, given that inflation is ramping up, much of it could be to do with people hoping to offset the cost of living, with homeowners eager to save money by slashing their monthly mortgage repayments.
"Remortgaging rallied in March," said John Bagshaw of Connells, "as the cost of living rose [and] consumers started to hunt ways to reduce outgoings. Food prices have been increasing at their fastest pace in three years while fuel prices have jumped 18% annually; faced with a spike in bills, homeowners have been forced to become more frugal.
"For those struggling, remortgaging can offer tangible financial relief. With the low base rate and property values increasing 6.2% annually, many are seizing the opportunity to save through remortgaging at a lower LTV. This trend is supported by the latest CML figures which show a 22% rise in the value of remortgage activity; if the price rises continue and household bills balloon, we could see an ever greater number of homeowners turning to remortgaging to cut costs."
Our own figures further highlight why so many people are now choosing to remortgage, with the savings that can be made understandably encouraging people to do so – and it's all about the average mortgage rate of two years ago compared with current figures.
Let's say you took out a two-year fixed rate mortgage in April 2015. At that time, the average mortgage rate stood at 2.97%, yet the current average standard variable rate (SVR) – the rate you could now revert to – stands at 4.60%. This means you'd face a rate increase of 1.63% if you chose to revert to your lender's SVR, whereas if you remortgaged to the current average two-year fixed rate of 2.32%, you'd see a rate reduction of 0.65%.
Just think of the savings that could be made through remortgaging, or the potential jump in repayments if you choose to revert. Doesn't it make sense to opt for the former? Now's a great time to see what's out there and find the best remortgage deals on the market, either by checking out our Best Buys or using our mortgage calculator to find the best deal for your circumstances.
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