Remortgaging is booming as customers take advantage of historically low rates.
Figures from the British Bankers Association show that gross mortgage borrowing was 6.3 per cent higher in January 2017 at £13.8bn, and remortgaging approvals were 15.7 per cent higher, driven by historically low interest rates.
Eric Leenders, BBA managing director for retail banking said: “The new year saw homeowners make the most of historically low interest rates by taking advantage of competitive re-mortgage offers. Nearly 29, 000 of these deals were approved last month – 16 per cent higher than January last year.”
The Council of Mortgage Lenders (CML) has also reported increased remortgaging activity, while conveyancing service LMS said that customers were increasingly driven by a desire to decrease monthly outgoings as well as lock in low rates.
In December 2016, 23.3 per cent of those remortgaging told LMS they were looking to reduce their monthly outgoings by remortgaging. In December 2015, just 21.7 per cent of remortgagors said the same .
The CML figures showed the highest mortgage activity for January in nine years.
CML economist Mohammad Jamei said that there was a weakness in buy to let and home mover mortgage, but remortgaging and first-time buyers were holding up the market
The BBA figures showed that mortgage approvals for house purchases were also at a twelve month high, however, suggesting continued consumer confidence in the housing market.
Economist Howard Archer from IHS Markit said that he expected this confidence to come under pressure in the coming year.
“The fundamentals for house buyers will progressively deteriorate during 2017 with consumers’ purchasing power weakening markedly and the labour market likely softening. Housing market activity and prices are also likely to be pressurized by stretched house prices to earnings ratios and tight checking of prospective mortgage borrowers by lenders,’” he said.
Mike Richards, from Mortgage Concepts Associates in London, said that he was finding that remortgaging is still popular. "People are remortgaging for better deals, and amazingly, given the buy-to-let changes, they are still remortgaging to get cash for second properties," he said.
