Remortgage numbers grow as homeowners take advantage of rock-bottom deals
Posted 9 December 2015 by Nick Parkhouse
Over recent months, more and more homeowners have taken advantage of low interest rates by remortgaging their property. Recent British Banking Association (BBA) figures revealed that the number of remortgage approvals has risen by over a third in the last year, with consumers keen to grab cheap fixed and discounted rates.
Now, a survey has found that nearly four in five remortgagors switched lenders in October with many looking to increase the size of their loan or to reduce their monthly repayments. The latest BBA data revealed that remortgaging has increased in the last few months. There were 24,275 remortgage approvals in October, up 34% on the same month in 2014.
And, a new survey has revealed that 79% of remortgagors switched lenders in October – an 8% increase from the 71% of borrowers who switched in September.
The research from LMS found that half of homeowners remortgaged only because they had come to the end of a current deal suggesting that thousands of people are not proactively taking advantage of the record-low rates available.
The survey also revealed that more than a third of remortgagors (37%) were able to lower their monthly mortgage payments by switching to a better deal. 3% reported that they had reduced their payment by more than £500.
Almost a third of remortgagors (31%) chose to remortgage to increase the size of their home loan, up by 3% from September. More than one in five (22%) increased their mortgage by more than £10,000. Of the remortgagors who increased the size of their loan, 59% did so in order to make home improvements, while more than a quarter (27%) did so to pay off other debts. A small number also used the extra cash to pay for a holiday, school fees or to help their children buy property.
Andy Knee, chief executive of LMS, says: “October witnessed record levels of remortgaging activity as customers respond to the availability of competitive mortgage deals currently on offer. The Bank of England is now likely to hold interest rates at bay until well into 2016, making it a fruitful season for remortgaging.
"On top of rock bottom rates, the wheels are in motion for continued momentum; UK housing stock values are increasing; and lenders are open for business.
“Borrowers not thinking about the option of remortgaging just yet should be aware that they can save hundreds of pounds by locking into the right deal. The value of a broker should also not be underestimated, as they can be help to guide customers through the process, and select an appropriate product based on the borrower’s personal circumstances.”