Remortgaging has enjoyed a surge of activity of late, helped in no small part by plummeting mortgage rates and a keen desire to avoid uncertainty in the months and years ahead. In fact, July saw the strongest remortgage lending total for almost eight years!
The figures, from LMS, show that monthly gross remortgage lending totalled £7.1bn during the month, the highest seen since October 2008. This also marks an increase of 27% from June (up from £5.6bn) and is 42% higher year-on-year, highlighting the surge in activity in this sector of the market.
The number of remortgage loans also increased by 27% on a monthly basis, totalling 41,157, the highest seen since January 2009 and up 36% from July last year. But just what's driving this spike in activity? Well, analysis shows that this "post-Brexit rush", as the report calls it, has been driven by mortgage rates falling to record lows. This, together with rising house prices, falling SWAP rates and base rate speculation, has "contributed to a favourable outlook for the remortgage market".
It's clearly a prime time to consider remortgaging, and many are capitalising on that fact to increase their loan size. Indeed, the average remortgage rose to £172,184 in July (up 9%), which means that the total amount of equity withdrawn through remortgaging rose by 27% to £1.2bn, the highest since April 2008 (£1.4bn).
Many are putting all those extra funds to good use, too, with the data showing that more homeowners are remortgaging to fund home improvements and pay off debt. This could be a sign of consumer confidence – the fact that homeowners are willing to take on a larger loan to fund other activities suggests that they're not too concerned about paying it back – despite widespread speculation about the effects of the referendum.
Andy Knee of LMS said that the vote has done little to overshadow things: the "environment is ripe for remortgaging, as product rates plummet to new lows. Homeowners have been quick to capitalise on this and there's little sign that incentives to remortgage will disappear any time soon.
"Although there is little for homeowners to fear in terms of a base rate rise over coming months, many could seek stability by remortgaging and fixing now, and we expect activity to maintain its momentum through the rest of 2016."
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