There was a fall of four percentage points in the number of people opting to remortgage in order to increase the size of their loan (so as to release equity), from 28% in March to 24% in April, according to research from LMS.
The firm said this marks a shift in behaviour from recent months and is also a drop of six percentage points from April last year.
Those increasing the size of their loan by more than £10,000 has also decreased – a fall of six percentage points to 16% in April, from 22% in March.
In contrast, the monthly survey from LMS found a spike in the number of homeowners who remortgaged to reduce their monthly payments. Almost two-fifths of remortgagors cut their monthly payment by up to £500, 7% more than the number who did so in March.
This is the highest percentage since June 2015, when 40% of remortgagors reduced their payments by up to £500. Around 3% who remortgaged did so to reduce their monthly payments by more than £500.
Andy Knee (pictured), chief executive of LMS, said: “The outlook remains bright for remortgaging but there has been a slight shift in the attitudes of why people are doing so. Remortgagors in April were more interested in getting the most cost-effective deal to reduce their monthly payments and boost their spending power elsewhere, rather than using it as a tool for debt reduction or increasing the size of their loan: an indication household finances are more robust and a ray of hope in the face of predicted economic slowdown as the country nears the EU referendum.
“Following the vote, the Bank of England is likely to keep rates on hold – or even lower them – but speculation that a potential Brexit would cause mortgage costs to rise, should encourage prudent homeowners to cement their finances against uncertainty and reap the benefits by locking in to a low mortgage rate.”
Remortgagors are also capitalising on the competitive rates currently available. The percentage remortgaging in order to take advantage of a lower mortgage rate rose to 63% in April after staying steady at 57% throughout the months of February and March.
Homeowners who chose to remortgage because they came to the end of their current deal rose by 11%, from 45% in March to 56% in April. This suggests borrowers may be increasingly complacent about actively hunting for the best deals to take advantage of. The number who expect interest rates to rise remains at a record low of 12% – the same as in March – which goes some way to explaining the lack of motivation among borrowers who see no sense of urgency.
People remortgaging to pay off other debts fell month on month from 7% to 6% in April. The number who did so to make home improvements (18%) was unchanged from last month.
