Monthly gross remortgage lending totalled £5bn in May 2016, according to LMS, up by 26% from May of last year.
It is however down by 16% from April, which was a very strong month for remortgaging. The number of remortgage loans also fell month-on-month – by 7% – from 34,800 in April to 32,334 in May. However, this is 31% more than May 2015 when 24,700 borrowers remortgaged.
The average amount of equity withdrawn per customer from remortgaging activity has risen by 43% month-on-month, from £23,479 in April to £33,691 in May. The average amount of equity withdrawn is also up by a quarter in comparison to May last year when equity withdrawn stood at £26,863.
The total amount of equity withdrawn rose by 33% over the last month from £817m to £1089m in May. This was also 64% more year-on-year, from the £664m recorded in May 2015.
This is also the highest amount of total equity withdrawn since May 2008, back when remortgagors withdrew almost £1.21bn
Despite being the lowest interest rate on record, however, average household income fell from £50,000 in March to £44,898 in April – a fall of 10%. The household income recorded in April 2016 is also 1% lower than in April 2015, when income was recorded at £45,365.
Andy Knee, chief executive of LMS, said: “Remortgaging witnessed its best month of May since 2008, although the numbers are slightly down following a rush to remortgage in April. The favourable mortgage market, with eagerly competitive lenders, record low rates and rising house prices provided the ideal background remortgaging to continue its year-on-year surge.
“We will have to wait and see what the impact of June’s Brexit decision on the housing and mortgage markets will be in the short and medium term. There will be some uncertainty and volatility to cope with as everyone absorbs the news and this is likely to put a dampener on the housing market at least until the autumn. However, interest rates remain at historically low levels and for those with a mortgage now is a great time to take out a fixed rate and stabilise their financial outgoings.
“Lenders may well come under pressure and their appetites for new business may shrink in the short term. If they do, the range of excellent rates available today might not be around for much longer, so fixing now might be a smart move.”
