The remortgage market continues to surge ahead, with frequent updates highlighting the strength of this sector, and yet another report has just revealed that remortgaging activity has hit a nine-month high. Thanks to record low mortgage rates, it's little wonder things are progressing so well. Is it time you got in on the action?
The figures, from conveyancing service provider LMS, show that the number of remortgagors increased by 11% in August to 41,497, up from 36,800 in July, marking the highest level of remortgaging activity since January 2017. Activity saw an even stronger boost on an annual basis, with the number of remortgagors up by 16% from the 34,900 recorded in August 2016, so it's clear that growing numbers of homeowners are opting to take the plunge and remortgage to a better deal.
Interestingly, many appear to be remortgaging to secure their finances, rather than increase the size of their loans. The low mortgage rates of recent years meant that many had previously been opting for the latter, capitalising on the chance to release equity and get a valuable cash injection without paying too much for the privilege, but it seems that many are now taking a more long-term view of their finances.
Indeed, the amount of equity released by remortgaging fell by 12% to £23,634 in August, down from £26,457 in July. Similarly, the total value of remortgaging also fell, despite an increase in the overall number of remortgagors, down by 5% from £6.7 billion in July to £6.38 billion in August.
Just 16% of borrowers lowered their overall mortgage payments by remortgaging, as many sought to lock into deals instead to manage the impact of potential rate rises – the figures show that borrowers selected five-year fixed deals in record numbers, with 39% opting for a five-year fixed rate mortgage, up from 37% in July and marking a record high.
"Remortgagors are locking into record low rates to manage the impact of potential rate rises and bolster their financial security," explained new CEO Nick Chadbourne. "This makes sense given borrowers were warned that time could be running out to fix into low cost deals in August. According to the National Institute of Economic and Social Research, the UK economy will bounce back in 2018 – prompting the Bank of England to raise interest rates to a more normal level before Brexit. It's no surprise 45% of borrowers we spoke to think interest rates are going to rise soon."
It isn't only borrowers who think that rates will rise soon, either. Providers are poised to start increasing their own mortgage rates on the back of mounting base rate speculation, with our latest data showing that 21 lenders have already done so in recent weeks. This means now's the time to take action – if you want to beat the rate rise, start comparing the best mortgage rates to lock into a low-cost deal while they're still around!
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