The value of monthly gross remortgage lending fell by 16% in February to £3.5bn, down from the £4.1bn in January reported by the Council for Mortgage Lenders (CML) last week, according to LMS.
LMS estimates the number of remortgage loans also fell by 10% to 23,135 in February, after a strong start to the year in January. This figure is also down 7% from this time last year, when there were 24,900 remortgage loans recorded.
The average amount of equity withdrawn by remortgaging per customer rose to £26,862 in February – a 41% rise from January. This is also 94% higher than February 2014 when the average amount was £13,833. The total amount of equity withdrawal from remortgaging in February therefore stood at £621m, an 80% increase from the previous year.
The average remortgage loan has decreased slightly to £149,143 – a 2% fall from last month, and a 4% fall from 12 months ago. The remortgage market share now equates to 26% of total transactions, 2% lower than last month, but up 1% from February 2014.
Andy Knee (pictured), chief executive of LMS, said: “Despite inflation reaching its lowest-ever level – falling to zero for the first-time on record – there has been a significant increase in the average amount of equity withdrawn through remortgaging. It is apparent, that despite the low inflation we’re experiencing, which should provide a boost to household spending power, many families continue to feel the pinch and remortgaging can provide a much needed source of income.
“It is therefore important that low inflation does not affect the wage growth we’ve finally started to experience in recent months since affordability continues to remain key. As interest rates look set to remain at their record low for even longer it is important that borrowers do not become complacent about remortgaging since now is a prime time to make the most of the competitive rates on offer.
“House price growth witnessed throughout 2014 has meant that the increase in the amount of equity withdrawn through remortgaging has not increased the LTV ratio – some more good news for customers who could use the extra boost to their income but are cautious about increasing the size of their mortgage.”
