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Record low mortgage rates have given the mortgage market a serious boost, with borrowers able to secure seriously low repayments that they can guarantee for the long term. It's therefore little wonder that remortgaging continues to go from strength to strength – so much so that remortgaging has become the most active sector of the entire mortgage market.
That's according to research from Connells Survey & Valuation, with their figures showing that one in every three property valuations (33%) in June came from remortgage customers. This is seven percentage points higher than an average June, with remortgaging typically accounting for 26% of the valuations market. This suggests that there's been a clear change of focus this year, as more homeowners decide to get in on the remortgaging action.
This includes both owner-occupiers and landlords: standard remortgaging represented 23% of market activity in June, while buy-to-let (BTL) remortgaging accounted for a further 10% of loans. When taken together, both types of remortgaging are responsible for more activity in the mortgage market than first-time buyers (31%), BTL purchases (8%) or those who own a property and are looking to move (27%), and it's all down to lower rates.
The analysis suggests that this rush to refinance is being driven by expectations of a base rate rise later this year, with the low rates currently on offer incentivising homeowners to remortgage and reduce their monthly repayments, particularly as the cost of living is on the rise.
"Remortgaging is now taking a leading role in the mortgage market," said John Bagshaw, corporate services director of Connells Survey & Valuation. "Low interest rates are attracting owner-occupiers and landlords eager to offset rising costs, which has led to remortgage activity more than doubling since 2009.
"Many homeowners have chosen to remortgage to reduce monthly repayments, freeing up additional income, while the reduction in buy-to-let mortgage tax relief means landlords are also looking to cut their monthly costs. When combined, buy-to-let remortgaging and traditional remortgaging are now a more significant segment of the market than first-time buyers – a stark contrast from a couple of years ago."
The uncertain political and economic landscape could also be having an impact, added John, with consumers looking to remortgage now to ensure they're better prepared later down the line, in case the economy slows and disposable incomes are further stretched. Given the savings that can be made through remortgaging, it's little wonder so many are taking the leap: our own figures show that the average two-year fixed mortgage rate of July 2015 stood at 2.76%, while today's SVR has edged up to 4.60%.
This means those coming to the end of a two-year deal could see a rate increase of 1.84% if they choose to revert, something that could lead to a significant rise in repayments. Conversely, if they reverted to the current average two-year fixed mortgage rate of 2.26% – which is a new record low – they'd see a rate cut of 0.50%, and lower repayments as a result.
This, combined with ongoing speculation of a base rate rise, could encourage even greater remortgaging activity in the months ahead, so why not get in on the action? Check out the best remortgage deals to see how much you could save, and get on the remortgaging bandwagon.
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