Monthly gross remortgage lending rose to £6.4bn in April 2016, the largest amount since the £7bn recorded in November 2008 more than seven years ago, LMS has revealed.
This represents a 36% increase from the £4.7bn recorded in March and a 48% uplift from April 2015’s figure of £4.3bn.
The number of remortgage loans also increased – by 41% – from 28,000 in March to 39,353 in April. This is 47% more than April 2015 when 26,700 borrowers remortgaged. This is the greatest number since July 2009 when 39,500 remortgaged.
Low interest rate has resulted in mortgage affordability improving sharply. Now remortgage payments as a percentage of income are at 16.79%, a record low, down from 18.4% the previous month.
Andy Knee (pictured), chief executive of LMS, said: “Remortgaging in April has bounced back after a quiet March, with levels of activity taking place that haven’t been seen since the recession. March saw the market overwhelmed by second home-owners looking to push through transactions before changes to Stamp Duty came in, but as April arrived, existing homeowners were able to remortgage and capitalise on the great rates currently available.
“The average amount people are withdrawing through remortgaging fell to a 13-month low, suggesting household budgets are not as constrained as previously. Homeowners can also celebrate that – as a result of such low mortgage rates and rising incomes – repayments as a percentage of income have fallen to a record low, boosting family finances.
“However, the subject of Brexit will continue to dominate headlines until the 23rd June – and possibly after – which could have an impact on the mortgage rates that banks offer as well as household finances. Fixing now means you can rest assured of a competitive rate and make substantial savings to your outgoings each month.”
Meanwhile, mortgage interest rates fell to 2.49% in March, down from 2.51% in February.
The sum of annual remortgage repayments fell from £8,593 in February to £8,344 in March as a result of lower interest rates, while average household income rose by 7% from £46,605 to £50,000 in the same period. This meant that annual remortgage repayments as a percentage of income fell from 18.4% to 16.7% month on month – a record low.
Average mortgage payments as a percentage of income also fell, from 21.2% to 19.7% between February and March, but this remains three percentage points more than remortgage costs.