Fri, 26 Feb 16
Re-mortgage in the UK topped £6 billion in January 2016 for the first time in seven years.
New figures from LMS reveal that monthly gross re-mortgage lending rose to a high of £6.2 billion at the start of the new year, a rise of 49 per cent from £4.2 billion in December 2015.
This is the largest value of re-mortgage lending in a month since November 2008, when £7 billion worth of loans was recorded.
The monthly growth is partly a seasonal uplift, as spring cleaning spreads to personal finances as well as people’s living rooms, but a number of other factors are driving the trend.
Indeed, interest rates remain at all-time lows at the start of 2016, which means that home-owners can save a significant sum by re-mortgaging their home. They are certainly not starved of choice: according to the National Mortgage Index from Mortgage Advice Bureau, consumer choice of mortgage products has reached a near-eight-year high, with 17,132 products available on the market in January - the highest since March 2008.
Combined with house prices, Andy Knee, Chief Executive of LMS predicts that even after any short-term rush ahead of the looming Stamp Duty hike in April, growth is expected to continue.
"Mark Carney’s indication that the Base Rate will stay low for a while longer means borrowers will continue to enjoy great rates. On top of that, the shadow of a Brexit and global economic uncertainty looms on, precluding a Base Rate rise. However it would still be advisable for savvier borrowers to lock into low rates to maximise their cost savings," he adds.
Per customer, the average amount of equity withdrawn through re-mortgaging fell from £30,361 in December 2015 to £25,955 in January 2016. However, this is still the largest amount recorded in the month of January as borrowers take advantage of rising house prices and competitive rates. The average withdrawal was also 36 per cent higher than January of last year (£19,021).
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