LMS – Remortgage market continues to boom
The remortgage market continued to grow in May, with both the number and size of the average loan increasing according to the latest figures from LMS.
Its monthly remortgage report shows that there were 53,624 remortgages in May, up from 52,745 in April. This is part of a longer term trend which has seen the volume of remortgages rise steadily since mid 2017.
The average loan amount is now £172,000, up from £171,622 the month before. Again this is part of a longer-term trend which has seen the amount people are borrowing increase, although the three-month rolling average has dipped back from its peak seen a year ago.
This remortgage market is being driven by competitive mortgage deals. According to LMS the average homeowners saved £195.09 a month by remortgaging, with almost one in two, 44 per cent, opting for a five-year fixed rate product. These longer-term fixes remained the most popular product in May.
A total of 45 per cent of borrowers increased their total loan size when they remortgaged. A further third, 31 per cent, saw no change in the size of their borrowings, while 24 per cent used the opportunity to remortgage to reduce the size of their total debts.
Of those increasing their debt, the average loan increase was just over £20,000, while those who reduced their loan did so by an average of just over £10,800.
LMS chief executive Nic Chadbourne says: “Last month saw a sharp increase in remortgage volumes. April and May have been recorded as the busiest months of the year for product expiry rates for the last two years, so these numbers fall in line with market expectations.
“Current volume levels now sit at a 12-month high, revealing that despite wider uncertainty the market is resilient.
“Homeowners are continuing to take advantage of interest rates at near record low levels, with almost half of borrowers now opting for a five-year fixed rate product.”
He says this is part of a trend that has been seen in recent months and it will be interesting to note if it continues into the second half of the year, particularly if economic or Brexit uncertainty increases.
This caution is reflected in the fact that 65 per cent of consumers expect an interest rate rise within the next year.
The LMS report also showed that brokers remain a vital cog in the remortgage process, with 67 per cent of borrowers picking a remortgage product that had been recommended by a broker. This is a slight increase on the 65 per cent figure cited in April’s figures.
Source: Mortgage Strategy