According to new data from The Mortgage Hut, there has been a recent surge in remortgaging, bringing it to record levels and meaning it now accounts for 39% of all mortgages.
The proportion of remortgages has risen by nearly 10% over the last 12 months, as home owners are increasingly switching mortgage companies to find more attractive rates. The influx of new mortgage products this year has helped drive demand for remortgaging, together with the recent interest rate rise.
Buy-to-let remortgaging has also risen and now represents 17% of all mortgages, up by 8% year on year, thanks to a sharp increase in mortgages available for landlords.
Chris Schutrups, Managing Director of The Mortgage Hut, said: “More and more home owners do not fit the conventional box for lenders, such as contractors and the self-employed. However, over the last 12-18 months, many lenders have recognised that the profile of home owners is changing and they need to adapt.
Many home owner and landlords who have been saddled with lenders on less than competitive interest rates, or stuck on higher standard variable rates, have been able to switch to new lenders.
Rising property prices has also had an impact on remortgage growth, especially in London and the South East. Many homeowners have chosen to reinvest in their property, by putting on an extension or refurbishing the property, rather than moving, which can be much more expensive. For example, home owners moving to a £600,000 property need to find £24,000 for the stamp duty, plus removal costs and estate agents’ fees that could exceed £7,000. However, a single story extension can cost between £25,000 and £85,000, and a loft conversion from £35,000 to £60,000.
Homeowners are seeing some down valuations creep into the market as confidence from recent good times have been met by some caution by surveyors who have generally err on the side of caution.
We expect to see the demand for remortgaging continuing to rise in 2018, especially if there are further rate rises. There is likely to be a shift towards more consumers considering five year fixed rates, as the risk of rate rises remain for the time being.”