Mortgage borrowing soars as half of remortgagers increase their loan
Homeowners across the UK are now borrowing more money from mortgage lenders than ever before according to new figures released this week.
According to mortgage broker Mojo Mortgages, the average amount of money being applied for by existing homeowners has increased by just over £13,000 (up 25%) over the course of the pandemic – rising from an average of £52,209 in 2019 to £65,267 as of August 2021.
It’s not just the amount of money being borrowed per applicant that’s risen – the amount of people looking to borrow has also seen a significant uplift – with remortgage applications for home improvements up 174% for the year so far (when compared to this time in 2019).
LMS have also released their latest remortgage market stats which show that 32% of remortgages are to release equity from their property. Their figures show that 49% of those remortgaging increased the size of their loan by an average of £16,382.
Cassie Stephenson, director of mortgages at Mojo Mortgages, suggested the demand was driven by the desire to increase and renovate existing space at home:
“After such an uncertain 18 months you might have thought that purse strings would have tightened from both homeowners and lenders, however in many cases this has been the complete opposite.
“With people spending more time in their homes than ever before, homeowners have had the time to imagine their dream property and the steps required to make this a reality as society opens up and returns to normality.
“Couple this with record low rates for remortgages – as low as 0.83% in some cases – and you can see why homeowners are looking to strike while costs are low. Of course, it’s important to consider all the fees involved and not to focus solely on rates when looking to get the best deal.”
Nick Chadbourne, CEO of LMS commented
“Though this increase in instructions was expected given the large volume of ERCs expiring in July, we would still expect activity to be higher, given that July is one of the biggest peaks in ERC expiries in the year. The data shows that many borrowers are in fact continuing to opt for a product transfer due to the competitive rates offered by their current lender.
“Many offers will come with significant arrangement fees, which might not make these deals as appealing in the long-term. Product transfers aren’t necessarily the best route either, even if a lower rate is on the table, as lenders often reach out months in advance and a better deal could be found if borrowers reviewed all available options closer to the time.