"When looking at the overall remortgage market, 2016 as a whole has been flagged up as being the best year for the sector since 2009."
In my Q3 remortgage review piece I closed on the fact that there was no time like the present for intermediaries to illustrate their worth and encourage clients to take advantage of the competitive nature of the current marketplace. While I certainly can’t take any credit for this in any way shape or form, it’s clear that many intermediaries appear to have upped their remortgage game.
Data from the Intermediary Mortgage Lenders Association suggested that remortgage applications were more successful in Q3 than in the previous quarter. In the third quarter of the year 80% of remortgage applications resulted in an offer, with 83% moving onto completion. By comparison, 77% of applications were successful in Q2. As a result, 67% of all remortgage applications completed in Q3 – the highest percentage seen in any quarter since IMLA began tracking this at the start of the year. The report also found that remortgage enquires increased by 26% during the third quarter.
Which leads to the question - did this positivity continue into Q4?
October figures released by the Council of Mortgage Lenders suggest so, with remortgage loans seeing an increase month-on-month and year-on-year by volume and by value. Remortgage activity for the month totalled £6.1bn, up 11% on September and 7% compared to a year ago. This amounted to 34,700 loans, up 10% month-on-month and 5% compared to the same period in 2015. This was also said to be the highest amount of loans taken out for remortgage since January 2009. Additional research from Connells Survey and Valuation reported remortgage valuations to be up 16.8% in October when matched with October 2015 figures, as property owners continued to take advantage of low interest rates.
Moving into November, overall lending volumes reflected stable market conditions. CML statistics showed that remortgage activity totalled £5.8bn, down 5% on October but up 14% year-on-year. Breaking this down, it amounted to 34,700 loans, unchanged month-on-month but up 13% on November 2015.
Other figures from the Bank of England Money and Credit suggested that remortgage approvals had soared to an eight year high. The data outlined that the number of approvals for remortgaging was 45,683 in November - the highest figure seen since October 2008. This represented a significant rise from the reported 43,513 remortgage deals approved in October and an average of 42,664 over the previous six months.
When looking at the overall remortgage market, 2016 as a whole has been flagged up as being the best year for the sector since 2009.
This is according to new figures from LMS, which revealed that the total value of remortgage lending topped £65.7bn in 2016, an increase of £11.5bn (or 21%) from 2015. The total value equated to an average of £5.5bn being lent to remortgage customers per month, £1bn more than the monthly average recorded in 2015 (£4.5bn).
The number of remortgages increased notably too, with the total standing at 384,950, up 15% from 2015 (333,400) and equating to almost 4,300 additional remortgages each month. The figures are equally as robust on a monthly basis, with there being 36,850 remortgages in November alone, an annual increase of 21%, and the highest number since July 2009.
Such data reflects a lengthy climate of low interest rates and growing numbers of homeowners taking advantage of some highly competitive deals. Some predictions regarding a potential rise in lenders headline rates have already been noted, and speculation over a wider Bank of England base rate rise remains in the balance. This combination points to a pressing need for those borrowers sitting on a Standard Variable Rate, or coming to the end of their mortgage term, to seek professional advice sooner rather than later. Thankfully, it appears that this message is being received and understood by a growing number of homeowners.
A study from TSB illustrated that almost a third (31%) of eligible homeowners are planning to cash in on low interest rates in 2017. Tellingly, one in four (25%) of those planned to act quickly and remortgage in January. This is a positive step but the potential of the remortgage market is further emphasised by the fact that prospective savings are still being underestimated by nearly half. The survey of 2,000 homeowners found that the average saving expected when remortgaging their property to be £49 a month. This compared with an actual average of £96 per month, or £2,300 across the life of a two-year fixed term on a £100,000 mortgage.
In addition, many homeowners remain unaware of the opportunity altogether. More than half (54%) of those who took part in the study weren’t able to correctly identify the current Bank of England base rate. And 15% of homeowners who aren’t considering remortgaging said they won’t be doing so because it was too much effort or that it hasn’t crossed their mind. These are worrying statistics which highlight the need to continue working hard in terms of educating homeowners on the financial benefits attached to remortgaging.
When looking back on Q4 we did see some slowing of remortgage business levels but this was expected and can largely be put down to seasonal influences, not a fall in demand. Positivity and confidence does remain high throughout the sector and, as highlighted, a wealth of opportunities will continue to present themselves in Q1 2017.
