Remortgaging in UK reached eight year high in July

Monthly gross remortgage lending in the UK was at its highest level for almost eight years in July, reaching £7.1 billion, according to the latest data to be published. Conditions for remortgaging were boosted by the decision in June to leave the European Union, says the accompanying report from outsourced property services provider LMS. This monthly figure for July is up by 27% from £5.6 billion in June and is the largest amount since October 2008 and 42% higher than July last year when £5 billion of loans were made. The number of remortgage loans also increased by 27% from 32,400 in June to 41,157 in July, the most since January 2009. The July total was up by 36% year on year. Rising house prices, declining swap rates and speculation about an imminent base rate change at the Bank of England have all contributed to a favourable outlook for the remortgage market, the report says. LMS data also shows that home owners are remortgaging more frequently and keen to capitalise on the competitive rates currently available. The term of the average loan that was remortgaged fell by 15% or nine months from five years in June to four years and three months in July, the lowest since October 2009. This was also 18% or 11 months lower than the average for July 2015. As the average remortgage loan size increased to £172,184 in July, up 9% from £157,557 in June, the average LTV also increased from 54% in June to 58% in July. LMS data suggests that more home owners are remortgaging to fund home improvements and pay off debt and this is a sign of consumer confidence, despite widespread speculation about the effects of the UK’s vote to leave the EU. The surge in remortgaging meant the total amount of housing equity withdrawn via this route in July rose 27% from £951.8 million to £1.2 billion. This was the greatest amount for more than eight years, since £1.4 billion was withdrawn in April 2008. ‘The aftermath of the UK’s vote to leave the EU has not overshadowed an environment that is ripe for remortgaging as product rates plummeted to new lows. Home owners have been quick to capitalise on this and there’s little sign that incentives to remortgage will disappear any time soon,’ said Andy Knee, chief executive of LMS. ‘People who remortgaged in July did so more frequently than they have for more than six years, no doubt to take advantage of low rates in many cases and reduce their outgoings. Feedback suggests almost two thirds remortgaged in July to take advantage of competitive rates, highlighting that significant savings are ripe for the taking,’ he explained. ‘Although there is little for home owners to fear in terms of a base rate rise over coming months, many could seek stability by remortgaging and fixing now, and we expect… Continue reading

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