This is 81% higher than June 2014, when the average amount withdrawn was just £19,036 as remortgagors are encouraged by the low interest rates currently on offer. Annual remortgage repayments now account for less than a fifth (17.6%) of household income, slightly lower than last month when they accounted for 17.8% and a record low.
LMS found the total amount of equity withdrawn from remortgaging in June stood at £852m. This is the largest amount withdrawn since July 2008 when £955m was withdrawn through remortgaging.
June’s figure is up 40% from May and up 86% since June of last year when equity withdrawn stood at £459m.
The average interest rate fell to 2.59% in May, a new record low following eight months of falling rates, great news for borrower budgets. But with the prospect of an interest rise looming, borrowers are urged to consider remortgaging now to take advantage of the best rates currently on offer.
Analysis of LMS and CML data shows that the value of monthly gross remortgage lending increased by 1% to £3.7bn in June compared to May’s figures. However, gross remortgage lending was down by 2% from June last year.
LMS also estimates that the actual number of remortgage loans increased by 9% from 22,700 in May to 24,693 in June. This was also 2% higher than the number of remortgages recorded in June 2014.
Andy Knee, Chief Executive of LMS, said:
“Record low rates of remortgaging and better affordability – repayments now equate to just 17.6% of income – have spurred people on to remortgage now for extra cash to spend or pay off other debts.
“There is a general sentiment of positivity throughout the summer, as families are able to remortgage for record amounts of extra income, but economic improvements are struggling to filter through to many families who still feel the pinch.
“It is, perhaps, a little hawkish for the central bank to raise the historically low interest rates, following Mark Carney’s words last week that rates may rise by January. A rise in interest rates, however small, would see outgoings increase, affordability tighten and place added pressure on struggling households.
“Whether or not an interest rate rise will come to fruition this year, borrowers need to prepare for the Bank of England rate raise. Now is the opportune time to take advantage of lender appetite and a low base rate, seek out the best remortgage deals on offer, and fix low rates before any change kicks in.”
