Latest figures from LMS reveal that the average remortgage loan has risen to £163,161 (a 5% increase from last month and 9% higher than June 2013), representing the largest amount ever recorded and a result of rising house prices.
Rising property values means homeowners are able to remortgage for record loan amounts without increasing the LTV ratio ensuring they preserve their current competitive rate.
Monthly gross remortgage lending saw a monthly increase of 11% in June to £3.7bn, up from the £3.3bn in May reported by the Council for Mortgage Lenders (CML) last week. It is also up 5% from last year as the market begins to stabilise following the introduction of MMR.
LMS also estimates that the number of remortgage loans also rose by 4% to 22,486 in June. This figure is, however, down by 12% from this time last year, when there were 25,600 remortgage loans recorded.
The remortgage market share now equates to 21% of the total market, a rise from 20% last month but down from 23% in June last year.
Andy Knee (pictured), chief executive of LMS, said: “While house purchase loans have bounced back and stabilised as MMR found its feet, remortgaging is still experiencing the brunt of this more acutely and as such is only slightly up at 4% and remains 12% down from last year.
“We remain fully confident, however, that the second half of this year will see a flurry of activity in the remortgage market with many people already expressing their intentions in anticipation of the inevitable base rate interest rise.
“Savvy buyers are still able to source good deals despite a rise in prices across the market with 56% of those remortgaging able to take advantage of a better mortgage rate*. Affordability is clearly critical for homeowners so it’s great to see remortgage payments as a percentage of income decrease for the first time since January.
“Continued house price rises are clearly having an effect as the remortgage loan increased in value to its highest ever amount, yet LTVs remained constant at 58% from last month. Importantly to customers, at a time when affordability is key, this means they remain eligible for competitive LTV rates.
“In London – where house prices are highest – this can be seen most acutely. The huge amount of equity seen in property there allows people to remortgage far larger sums than elsewhere while keeping the smallest LTV of any other region. As ever, London can be seen to be playing a whole other ball game from the rest of the UK.”
