In addition to a recent surge in the number of first-time buyers taking out new mortgage products throughout March 2017, recent figures have strongly indicated that the number of existing homeowners applying for a remortgage is also on the increase. In fact, LMS, one of the UK’s leading conveyancing firms, has just published a report suggesting that remortgaging hit an eight-year peak during February this year.
Breaking down the figures, the actual number of remortgage applications that were processed and approved this February reached a staggering 44,000, which is a record high when comparing all the previous months, covering an entire period stretching way back to January 2009. With a yearly increase averaging an impressive 35% per annum, it seems that property owners across the UK are unable to resist the temptation of remortgaging in order to lower their monthly payments, increase their borrowing terms, and release additional funds for home improvements, among an entire host of other similarly valid reasons.
However, although the remortgage sector and first-time buyer markets have experienced a notable increase in activity, it seems that traditional mortgage borrowing is entering a minor slump, with the number of conventional mortgage applications falling by a total of eight percent in February. This means that, in February alone, remortgage lending represented around forty per cent of all mortgage borrowing, which is a six-year record.
Explaining the popularity of remortgaging products
So, what are the main reasons for this substantial turnaround and considerable surge in the number of remortgage products being applied for? According to industry experts and a wide cross-section of UK economists, the average homeowner is deciding to switch providers as a means of saving money by taking advantage of the significantly low interest rates that are now attached to secured borrowing.
Another reason for the current trend is the fact that most lenders have indicated that the low mortgage rates available at present are not going to last forever, with many lenders already announcing expected increases in the coming months.
In the words of Andy Knee, who is currently chief executive at LMS, “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.”
“Meanwhile, inflation has risen to 2.3% and real wages are starting to fall. The consequence is that 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 hastened to add.
Switching products now, before it’s too late
Since March this year, the economic climate has entered a slightly worrying phase of minor instability and unpredictability. With this in mind, the time to take advantage of the currently low mortgage rates by means of switching lenders or remortgaging with an existing provider with the aim of getting a better deal is in the here and now, before the opportunity to seize such a competitive deal passes by completely.