LMS has reported that the value of remortgage lending rose by 23% from £5.5 billion in September to £6.8 billion in October.
The value of remortgage lending in October is the highest since November 2008 – almost eight years. It also represents an annual increase of 19% from £5.7 billion in October 2015.
The number of remortgages increased by more than a quarter (26%) from 31,500 in September to 39,547 in October. The number of remortgages in October is the highest since January 2009.
LMS said the revival in remortgaging activity comes as homeowners look to lock into record-low rates and in anticipation of a rate rise in 2017, amid continued political and economic uncertainty as a fall-out of the vote for Brexit.
The frequency of remortgaging accelerated in October. The average term of a remortgagor’s previous mortgage fell by 12% or seven months to four years and two months from four years and nine months in September. Annually, the average term of remortgagor’s previous term also dropped by seven months from October 2015. This is the most frequently people have remortgaged since March 2009.
Andy Knee (pictured), chief executive of LMS, said: “The remortgage market has enjoyed a revival since September’s post-Brexit low. Homeowners are remortgaging at levels that have not been seen for almost eight years, when the recession hit, while the frequency of remortgaging is at a seven year high.
“There are several key driving forces behind this revival. Some of this is seasonal. In the run-up to Christmas, families are looking to tighten the purse strings, reduce their monthly bills and prepare for the festivities. But last year, we only saw a 7.5% rise from September to October – this is of a different scale. Record-low rates are providing the perfect opportunity for homeowners to remortgage and secure monthly savings on their mortgage bills.
“Another factor is that homeowners are cautious of what the future may hold. Political and economic uncertainty stemming from June’s EU referendum result have affected people’s priorities. Families are seeking long-term security. While we wait for the outcome of Brexit negotiations, some homeowners are locking in low rates and fixing their monthly repayments.
“But perhaps the most important factor is the current anticipation of a rate rise in 2017. LMS found that 23% of remortgagors in October expect a rate rise to occur in the New Year.* Coupled with ever-increasing uncertainty, the likelihood of a rate rise next year has convinced some homeowners that now is the time remortgage.”