However, June was the first month in 2016 where the value of remortgage lending fell year-on-year, according to LMS and suggesting a drop in momentum. Each month of 2016 saw annual increases in the value of remortgage lending but June bucked the trend, falling from £5.3bn in June 2015 to £5.1bn, a drop of 3%.
The average amount of equity withdrawn per customer from remortgaging is also lower than last year, down 15% in comparison to June last year when it stood at £34,505. The average amount of equity release has also decreased 13% month-on-month, from £33,691 in May to £29,375 in June.
Annually, the total amount of equity withdrawn has also fallen, by 7% from £1.04bn in May to £966m in June. This is 14% lower than the same time last year, when equity withdrawn from remortgaging hit £1.13bn.
There is some good news for remortgagors in terms of affordability pressures. In May 2016, average household income was £45,672, recovering slightly from a 10% fall between March and April. The rise in household incomes, and because rates remained stable, means annual repayments for remortgages have fallen from £8,694 to £8,390, nearly £300 less*.
The monthly rise in income has therefore driven the annual repayment as a percentage of income down from 19.3% in April to 18.4% in May.
Commenting on the latest figures, Andy Knee, Chief Executive of LMS said:
“We witnessed a strong start to the year with remortgage lending up year-on-year each month in 2016, when in a safer, surer climate, homeowners had rushed to remortgage in a desire to lock into better rates before a possible rate rise. But activity in June has slowed with the value of remortgage lending down as indecision increased in the lead up to, and following, the referendum.
"While we’ll only begin to see the referendum result’s real impact from July’s figures onwards, it is very likely the small drop occurred as people took pause amid Brexit uncertainty before making any decisions. As the terms for Brexit are negotiated, there will be volatility as borrowers look out for the impact, if any, on their equity.
“Our research into remortgaging habits showed a spike in the percentage of remortgagors opting for a broker or adviser to guide them through the process – a sure sign people are looking for answers and stability, something which will continue to dominate in the months after the referendum. There is some good news, however, for remortgagors that falling repayments, and rising household incomes have taken pressure off families feeling insecure about what the future holds.”
