This is the largest value of remortgage lending seen since September last year as customers capitalise on the competitive deals currently on offer.
LMS estimates that the number of remortgage loans also rose by 16% to 27,734 in September. However, this figure is down 14% from this time last year, when there were 32,400 remortgage loans recorded.
The average remortgage loan has risen to £158,661 – a 2% increase from last month and 5% higher than the average loan of £151,428 in September 2013.
The remortgage market share now equates to 25% of the total market, 5% higher than last month but down from 29% in September last year.
Commenting on the latest figures, Andy Knee, Chief Executive of LMS says:
“This month’s figures demonstrate that many customers are seeking to take advantage of the competitive rates on offer at present. Tighter lending criteria and the introduction of MMR took their toll in the earlier part of the year but the market has recovered well to record the largest lending value seen in the past 12 months.
“There are some excellent offers for customers willing to shop around, and the opportunities for remortgaging in particular are boundless – with the biggest difference in rates between remortgaging and new purchase mortgages that we’ve seen for two years offering homeowners some welcome relief.
“As affordability remains critical to so many home owners, especially when an interest rate rise occurs, it would be foolish not to examine the options that may be available.
“Continued house price growth over recent months has come to the rescue of many households, bringing them out of negative equity and easing restrictions, providing many with the opportunity to remortage for a better rate.
“People are therefore advised not to be complacent, but to examine their options now as uncertainty ahead of the election next year, the prospect of an interest rate rise and changing economic conditions may introduce a note of caution to the market, curtailing lender appetites.”
Remortgaging still has a long way to go to reach the frequency witnessed prior to the effects of the recession, when borrowers were seen to remortgage every 3 years 1 month in August 2008. Since the financial crisis hit, many borrowers have been trapped in their current mortgages by negative equity and tighter lending criteria but more competitive rates and stronger lender appetite offer borrowers a good opportunity to remortgage now.
The average loan to value remortgage has not changed over the past month, staying at 57%. This is also unchanged from September last year. The LTV of the original purchase loan, has decreased by 3% since last month. This is also a drop of 2% from last year.
The total amount of equity withdrawal from remortgaging in September stood at approximately £489m, a 1% increase from the £485m recorded in August, but a 29% drop from September 2013.
The average remortgage loan amount varies considerably across UK regions and is broadly in line with the average house prices in these areas.
London had the largest average remortgage value in September of £265,063: significantly more than the £106,728 recorded in the North East. London also had the lowest LTV (52%), a rise of 2% from last month, while the North East had the highest LTV at 69%.
Overall, LTVs appear higher in September than in August, with only three out of the 10 regions falling (East Midlands, the South West and Wales).
