This is an increase of 4% from April and, according to LMS, suggests that as summer approaches, households are feeling the pinch and looking for additional ways to free up extra funds or reduce other debts.
This was accompanied by a fall in customers remortgaging for other reasons; for example, the number of customers remortgaging their properties in May in order to access lower interest rates fell to 62%, down from 65% during the previous month.
More than one in three (34%) of those who remortgaged did so to reduce their monthly payments by up to £500, also in a bid to access extra cash. However, this was down from 37% last month, and 38% from March.
Two-fifths of those remortgaging did so merely because they were coming to the end of their deal, which is also down 7% from 47% in April and down 9% from 49% in March. These trends highlight a shift towards people taking control of their finances and choosing to remortgage for reasons other than their initial term having run its course.
This growing awareness, however, is accompanied by a slight drop (5%) in the number of remortgagors that used a broker. In April 2015 the number of customers seeking intermediary advice rose to a high of 44%, but this fell back to 39% in May.
In terms of the reasons for remortgaging, 23% used the money to fund home improvements, and almost one in ten (8%) used the money to pay off other debts. Just a small number of homeowners said they planned to use the money to fulfil their children’s ambitions of owning their own home (2%).
Andy Knee, Chief Executive of LMS, commented:
“There is a general confidence in the stability of current interest rates, which may explain a more relaxed attitude towards paying off a remortgage loan and account for why almost a quarter of remortgagors chose to increase the size of their loan by more than £10,000. However, we urge caution that borrowers should not become complacent with regard to low interest rates, as news that fewer remortgagors are doing so for access to lower rates [62% in May vs 65% in April] suggests that competitive rates may not be as readily accessible as previously.
“Cash-strapped, savvy borrowers are certainly using remortgaging to their advantage, but this new confidence implies they’re starting to find their footing without the help of brokers and intermediaries. At a time of regulatory upheaval, and complex affordability checks, brokers can play a vital role in helping borrowers navigate the dreaded mortgage maze to pick the deal that best matches their current circumstances.”
