Along with a surprisingly reassuring uptick in first-time buyer lending in March, research suggests that remortgage activity is also on the up. In fact, a new report from conveyancing services provider LMS reveals that remortgage activity in February was the highest the UK has seen in any month since 2009.
Broken down into more detail, the number of remortgage deals signed in February hit an impressive 44,000 – the highest number recorded in a single month since January 2009. Even then, the month’s total was just 100 more than February this year. This represents an extraordinary year-on-year increase of more than a third (35%), suggesting that UK homeowners are being increasingly drawn to remortgage deals
Interestingly, the same period also saw a marked reduction in conventional mortgage borrowing activity among UK residents. According to the report, February brought about an 8% drop in the total number of approved mortgage applications, which in turn meant that remortgage activity accounted for an impressive two-fifth of all mortgage lending in the UK. It hasn’t hit a higher level than this for over six years.
In terms of why there’s been such a huge increase in remortgage activity, economists are highlighting a handful of select triggers. The most important of which being the availability of incredibly low mortgage rates, allowing thousands of mortgage payers to switch lenders and make enormous long-term savings. In addition, the fact that there have been one or two indicators that the run of ultra-low rates is coming to an end has spurred many of those previously on the fence to take action. Experts are strongly encouraging those with an interest in locking in a low-rate mortgage deal to do so as quickly as possible, given the way in which they might not be around for much longer.
“February enjoyed the biggest boom in recent remortgaging history. Remortgage transactions rose to their highest level in eight years as homeowners took advantage of continued low rates and the opportunity to lower monthly repayments,” noted Andy Knee, chief executive of LMS.
“However, February also fired a warning shot. Affordability worsened, more homeowners expect rates to rise and more are prepared to wait longer to remortgage again. Caution may well set in once again,”
“Meanwhile, inflation has risen to 2.3% and real wages are starting to fall. The consequence: homeowners will have less in their pockets come the end of the month. Remortgaging can help alleviate a potentially difficult financial situation, for example, one-in-five reduced their monthly repayments by remortgaging in February,” he continued.
“With the macroeconomic climate expected to be more precarious from March onwards, homeowners would be wise to take advantage of current conditions and remortgage now – before it’s too late.” – https://www.ukpropertyfinance.co.uk