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Remortgaging has certainly seen a surge in activity of late, helped in no small part by the dramatic drop in mortgage rates over the last year, so much so that 2016 as a whole proved to be the best year for the sector since 2009.
That's according to new figures from LMS, which reveal that the total value of remortgage lending topped £65.7bn in 2016, an increase of £11.5bn (or 21%) from 2015. The total value equates to an average of £5.5bn being lent to remortgage customers per month, £1bn more than the monthly average recorded in 2015 (£4.5bn), as homeowners took advantage of record low mortgage rates.
The number of remortgages notably increased too, with the total standing at 384,950, up 15% from 2015 (333,400) and equating to almost 4,300 additional remortgages each month. The figures are equally as robust on a monthly basis, with there being 36,850 remortgages in November alone, an annual increase of 21%, and the highest number since July 2009.
The remortgage sector has been growing steadily in recent years, recovering from its crash after the financial crisis. At that time, remortgaging activity plummeted, declining by 55% in value and 52% in volume between 2008 and 2009, before hitting its low point in 2010 (lending totalled just £40.1bn, with 319,300 remortgages advanced).
Since then, however, it's rebounded significantly – activity has increased by 64% since 2010 to last year's total of £65.7bn, and by 21% in numerical terms.
"2016 has been a year of turbulence, but it has been a positive one for remortgaging, which bounced back from the slump it encountered in the wake of the 2008-09 financial crisis, and is now 64% more valuable than in 2010," commented Andy Knee, chief executive of LMS.
As he pointed out, "remortgaging was driven by record low rates throughout the year, enabling homeowners to make substantial savings to their monthly outgoings" – and the savings were truly marked. The data revealed that 89% of borrowers lowered their interest rate by remortgaging, and one in five lowered their monthly repayments by up to £500 in the process, freeing up huge amounts of cash that could be put to great use in today's climate.
There are signs that many borrowers are turning towards longer-term deals, too, something that could be particularly savvy given expectations of a rate rise in the not too distant future. By opting for a five or even 10-year fixed rate mortgage, you can have the certainty that your repayments won't change for up to a decade, helping you budget better and protect your finances from the possibility of a rate rise.
"As we look ahead to 2017, we expect lenders to start raising the rates they have on offer," said Andy. "This is a view reflected among borrowers – 32% now anticipate a rate rise in the next year – who can remortgage now to secure favourable rates. The full impact of the EU referendum is still waiting to be felt in most areas of the economy, including the mortgage market, while rising inflation will apply added pressure to household budgets. Any way to reduce outgoings, such as remortgaging, will be welcome relief to many families who start to feel the squeeze."
If you're on your lender's standard variable rate (SVR) or are approaching the end of a fixed mortgage term, don't delay – compare the top fixed rate mortgage and remortgage deals to lock into a low-cost rate, and secure your repayments for the future.
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