65% of those who remortgaged their properties in February did so in order to access lower mortgage rates, according to research from LMS.
The property services outsourcing company surveyed customers to reveal that 31% increased the size of their loan, with 23% increasing their loan amount by as much as £10,000. The average amount of equity withdrawn through remortgaging has almost doubled year-on-year in February as people remortgage to help pay off debt or generate much-needed extra funds.
In addition, 40% remortgaged to reduce their monthly payments by up to £500 to free up cash as households continue to feel the pinch, despite record-low inflation and initial signs of wage growth.
Remortgaging also meant that 20% were able to fund home improvements, and 12% could pay off other debts. A small number of homeowners also said they planned to use the money to fulfil their children’s ambitions of owning their home (1%).
81% of borrowers used remortgaging to switch lenders to get the best deal available to them. Just 4% were incentivised by their existing lender to stay with them.
LMS said there has been a notable drop in the number of people who believe interest rates will go up any further from 30% in January to 14% in February, which may explain current apathy towards remortgaging with borrowers believing competitive rates will be around for the long haul.
36% have spoken with an independent mortgage adviser or broker, but the number of those requesting a consultation has also fallen from January (46%) as borrowers feel confident making the switch alone.
Andy Knee (pictured), chief executive of LMS, said: “Homeowners are clearly aware of the mortgage deals in the market and many have been quick to snap up better offers. There is an optimism in the market fuelled by increased lender competition and the perception that interest rates will not rise in the near future, also manifesting itself in a decrease in borrowers seeking intermediary advice.
“Optimism, while welcome, should not cause borrowers to become complacent. Swap rates have been on the rise, and have led certain competitors to withdraw their products days after release. The upcoming elections and pension freedoms will also add to uncertainty in the coming months, which could cause the mortgage landscape to change in the coming months and affect the offers available. Customers should therefore shop around for good deals and – if thinking of remortgaging – should not delay from switching for too long.”