The latest figures from LMS also reveal that gross remortgage lending was 8% lower than in March last year.
LMS estimates that the actual number of remortgage loans rose by 4% to 22,340 in March, but fell by 11% year-on-year as 25,100 remortgage loans were recorded in March 2014.
The average term of a mortgage has also increased to five years, despite low rates. This has lengthened by 11% from last month and by the same figure from March 2014 when borrowers remortgaged more frequently; every four and a half years. This change in remortgaging frequency, despite attractive products and increased competition among lenders, has been compounded by expectations of long-term low interest rates and the perceived difficulty of remortgaging due to stricter lending criteria.
The average amount of equity withdrawn from remortgaging per customer fell to £21,755 in March, a 19% decline from February. This is, however, 31% higher than March 2014 when the average amount was £16,597. Despite higher incomes and lower interest rates than this time last year, these latest figures show that families still struggle to make ends meet each month.
Commenting on the latest figures, Andy Knee, Chief Executive of LMS said:
“Despite a recent boost to mortgage lending as we head into summer, remortgage figures remain lower than last year, prolonged by the uncertainty of a looming election. At a time when interest rates and offers are at a record low, it is surprising to see that borrowers are remortgaging less often and are failing to capitalise on these offers. Stricter lending criteria and uncertainty around the election may be dissuading people from remortgaging more frequently.
“People are averaging higher incomes than this time last year, but affordability still remains an issue. These latest figures – showing that the average equity withdrawn through remortgaging grew by 31% from last year – is clear evidence of families struggling to make ends meet month to month, despite some economic variables moving in their favour.
“With the election round the corner, housing is high up the political agenda and a possible point of settlement for a coalition. While government intervention and policy is welcome to encourage stability, an artificial prop for the housing market is not a permanent solution. This is something parties should bear in mind: supply remains the major chink in the housing market armour and urgently needs addressing before a sustainable market can flourish.”
