Remortgaging receives welcome boost in January – number and value of loans rise by 20%
- Remortgage share of the mortgage market increases to 28% – the largest amount since September 2013
- Total amount of equity withdrawn by remortgaging rises 40% in a year but average amount of equity released per customer falls by a third as families feel welcome respite in the New Year
The latest figures from LMS reveal that the value of monthly gross remortgage lending saw an increase of 20% in January to £4.07bn, up from the £3.4bn in December reported by the Council for Mortgage Lenders (CML) last week.
LMS estimates the number of remortgage loans also rose by 20% to 26,756 in January, a welcome boost after a mixed 2014 for remortgaging. This figure is, however, still down 7% from this time last year, when there were 28,800 remortgage loans recorded.
The remortgage market share now equates to 28% of the total market, 8% higher than last month and the largest amount since September 2013, after the CML recorded a notable decline of gross mortgage lending in January.
The total amount of equity withdrawal from remortgaging in January stood at approximately £509m, a 40% increase from the previous year but a 19% drop from the £629m recorded in December.
The average amount by which the new remortgage value exceeded the redeeming mortgage value fell to £19,021 in January – a 33% drop from the record-breaking sum last month.
Commenting on the latest figures, Andy Knee, Chief Executive of LMS said:
“2014 was a mixed year for the remortgage market as the introduction of MMR and tighter controls from the Bank of England took their toll. A strong start to 2015 as people tackle their finances at the beginning of the year is a positive sign but we should not become complacent as challenges to the housing sector remain.
“Despite lowest-ever interest rates and a range of new mortgage products, lending levels are unable to maintain consistency. House building levels also remain far lower than their pre-2007 peak, which is critical to allow those currently blocked out of the market easier access.
“We’ve finally started to see wage growth, bringing some welcome respite to families who really felt the pinch over Christmas; the average amount of equity withdrawn through remortgaging per customer fell by a third compared to December, suggesting less pressure on household finances.
“Furthermore, the competitive rates available for remortgaging, coupled with rising wages, means that repayments now account for just 18.8% of income – the lowest amount since January 2011. This combined with the current deflation of prices should further boost household spending power and contribute to confidence in the economy.
“The run-up to the election has the potential to destabilise the confidence gained in the housing market but low interest rates should maintain lender appetite, and people should consider remortgaging to get the best deal available to them.”