Remortgaging activity is healthy but “could be higher”, report finds

The latest monthly remortgage snapshot published by LMS reveals that 49% of borrowers increased their total loan size, with average loan increases of £16,300. The report also shows that 45% of those who remortgaged took out a 5-year fixed rate product, the most popular product in July.

Changes in monthly loan repayments were also reported with 43% of borrowers increasing their monthly repayments by an average of £261 and 41% reducing payments by roughly £124. Just 16% of borrowers saw no change in their monthly repayments.

The primary driver for a third of all remortgages was to release equity from properties, and regional trends in the average remortgage loan amount were still very visible. The average remortgage loan amount in London and the South East was £295,505, while the average for the rest of the UK stood at £145,950, putting remortgage loan amounts 51% higher in London and the South East than the rest of England and Wales.

Early repayment charge (ERC) expiries in July are thought to have fuelled an increase in instructions across the mortgage sector but the “volumes could be higher” said Nick Chadbourne, CEO of LMS.

“Though this increase in instructions was expected given the large volume of ERCs expiring in July, it’s encouraging that nearly a third more borrowers shopped around for a cheaper deal when the time came to remortgage, benefitting from the rate wars gripping the market as lenders fight to offer the most attractive deal.”

But despite the healthy volumes, activity in July was expected to be higher, given that July is one of the biggest peaks in ERC expiries in the year. LMS 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.

Chadbourne commented that “many offers will come with significant arrangement fees, which might not make these deals as appealing in the long-term”. 

But, says Chadbourne, 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. Advisors must therefore be proactive in reaching out to clients to make them aware of all the options available and provide the best support during this time”.

 

This article was submitted to be published by LMS as part of their advertising agreement with Today’s Conveyancer. The views expressed in this article are those of the submitter and not those of Today’s Conveyancer.

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