According to LMS, loan values are on the rise as borrowers look to remortgage while rates remain low. The figures show that during October, 43% increased their total loan size, 32% saw no change in their total loan size and 26% reduced their total loan size.
Monthly loan repayments
In October 47% increased their monthly remortgage repayments 13% saw no change in their monthly remortgage repayments and 41% reduced their monthly remortgage repayments
Regional trends
The average remortgage loan amount in London and the South East was £279,258, with the national average currently at £136,175, a difference of 68.9%.
The longest previous mortgage length was found in the West Midlands at 58.69 months, and the shortest was in London at 50.86 months, showing a disparity of 14.3%
55% of borrowers expect interest rates to rise within the next 12 months, with 27% saying they think the cost of borrowing won’t increase until at least the next year. This explains the strong activity in the remortgage sector, which continues to underpin overall market performance, with homeowners looking to secure certainty over their monthly repayments in an uncertain economy.
Product purchasing
97% of those who remortgaged in October did so with a fixed rate product. Just 2% of borrowers chose a variable or tracker rate mortgage.
Purchases of 5-year fixes rose from 43% to 46%, and the increased popularity of 2-year fixes remained, with purchases decreasing only slightly from 42% to 41%. 5-year fixes remain the most popular products, and we are yet to see the growing popularity of 10-year fixes cause a significant change in product purchasing levels, with the figure for October decreasing from 5% to 3%, despite recent rate cuts on these products.
Nick Chadbourne, (pictured) CEO, LMS, says: "The 3-month rolling average remortgage loan amount rose in October, showing that borrowers are taking advantage of very competitive products and low interest rates while they can. The reason for the lower remortgage volumes could be explained by the timing of ERCs, resulting instead in a busy first week of November. Our forecasts expect Q4 remortgaging this year to follow 2018 figures.
October also revealed that the North East is lagging behind the rest of the North when it comes to loan sizes. The North West and Yorkshire saw growth of 9.1% and 2.7% respectively, while the North East recorded a fall of 4.1%. The North has been driving the performance of the wider market for some time, so it will be interesting to see how the whole region performs as we move into 2020.”