Conveyancing service provider LMS has revealed that the total value of remortgage lending in 2016 topped £65.7 billion, an increase of £11.5 billion (21%) from 2015.
This means the value of remortgaging in 2016 equates to £5.5 billion per month on average, £1 billion more than the £4.5 billion monthly average in 2015.
The total number of remortgages in 2016 hit 384,950, an increase of 15% from 333,400 in 2015. Over the course of a year the difference is equal to almost 4,300 additional remortgages each month.
There were 36,850 remortgages in November alone, an annual increase of 21%, and the highest number since July 2009.
Remortgaging activity plummeted after the financial crisis, decreasing 55% in value and 52% in volume between 2008 and 2009.
However, since then it has rebounded significantly. Compared to 2010, when remortgaging reached its lowest point – just £40.1bn in value and 319,300 by volume – activity has increased by 64% to £65.7bn and by 21% to 384,950 in 2016.
The average frequency with which homeowners remortgaged in 2016 was four years and nine months. In 2015, the average frequency was four years, 11 months: two months less frequently than in 2016.
LMS said this is a sign that homeowners capitalised on the record low rates that were available throughout the year to reduce their monthly outgoings. LMS data found that 89% of remortgagors were able to lower their monthly mortgage rate and one in five lowered their monthly repayments by up to £500.
When surveyed, 66% of people who remortgaged in November plan to remortgage again within the next four years in a bid to keep capitalising on the low rates available.
Andy Knee, chief executive of LMS, said: “2016 has been a year of turbulence. But it has been a positive one for remortgaging, which bounced back from the slump it encountered in the wake of the 2008-09 financial crisis, and is now 64% more valuable than in 2010.
“Remortgaging was driven by record low rates throughout the year, enabling homeowners to make substantial savings to their monthly outgoings. Anticipation of interest rate rises in recent months have also encouraged more people to remortgage with many opting to fix for longer. We’re already witnessing surging where the last lender to raise rates experiences huge application volumes as buyers desperately try to take advantage of the lowest rates. 10-year fixed term mortgages are also becoming increasingly popular as people seek longer-term security while the terms of Brexit continue to be thrashed out.
“As we look ahead to 2017, we expect lenders to start raising the rates they have on offer – a view reflected among borrowers – 32% now anticipate a rate rise in the next year – who can remortgage to fix now to secure favourable rates. The full impact of the EU referendum is still waiting to be felt in most areas of the economy, including the mortgage market. We expect confidence to fluctuate in March if Article 50 is declared, as expected. Rising inflation will apply added pressure to household budgets, so any way to reduce outgoings, such as remortgaging, will be welcome relief to many families who start to feel the squeeze.”
