Sceptic remortgagors continue to capitalise on low rates

Sceptic remortgagors continue to capitalise on low rates

A new report from LMS has revealed that the proportion of remortgagors who believe that interest rates will rise has decreased by three percentage points from 25% in December 2015 to 22% in January 2016.

Global economic uncertainty and the possibility of a Brexit in 2016 has delayed the likelihood of a base rate rise. The percentage of people now expecting a rate rise is therefore eight percentage points lower than in January 2015 last year, when nearly a third of people (30%) of people expected a rate rise.

However, this has not dissuaded homeowners from remortgaging or caused borrowers to become complacent. Almost two-thirds of people (65%) remortgaged to take advantage of lower interest rates.

Monthly gross remortgage lending rose to a seven-year high of £6.2bn in January 2016, a rise of 49% from £4.2bn in December 2015.

Savvy borrowers were also able to reduce their monthly outgoings. More than a third (36%) who remortgaged were able to reduce their payments by up to £500. A further 3% were able to reduce their monthly payments by more than £500.


Almost a third (29%) of remortgagors were able to increase the size of their loan, of which 72% increased the size by more than £10,000.

Other reasons to remortgage included paying off other debts, a factor that has fallen by four percentage points to 7% from 11% in December 2015 as financial pressures ease following Christmas. A small number of remortgagors also chose to release cash to help a child buy property (1%) while one in five opted to spend on home improvements (20%).

More than eight in ten (83%) people deciding to remortgage chose to switch lenders. There was a five percentage point rise from 41% in December to 46% in January 2016 in the number of people opting to use brokers or mortgage advisers in the remortgage process, as more borrowers saw the value of financial advice to help navigate them through the range of options.

Andy Knee, Chief Executive of LMS, comments: “With the looming possibility of a Brexit, and in the midst of global uncertainty and shaky markets, we’re seeing indications from the Bank of England of a base rate rise being pushed back further. Some have predicted a rise to be delayed until as far as 2019.

However, borrowers appear to be wiser, and are still remortgaging to reduce costs rather than becoming complacent. Remortgage lending rose by 49% to £6.2bn in January from £4.2bn in December and was also recorded as 45% higher than the same time last year. With the cost of a fixed-rate mortgage at historic lows, plummeting swap rates and so many great deals on the market, it’s never been a better time to lock into low interest rates.

It’s also encouraging to see borrowers taking greater control of their finances and seeking advice, especially at a time when many property investors in particular are hoping to complete their transactions before April tax changes come into effect.”

Join our mailing list:

Leave a comment



Latest Comments

Tom Allen
Tom Allen 20 Sep 2017

Absolutely agree with you!

view article
RyanGeo
RyanGeo 18 Sep 2017

A sharp correction would be a less dramatic expression to use. That is already underway in certain sectors in Reading where I practice as Chartered Surveyor

view article
sean benton
sean benton 01 Sep 2017

Identity theft is a thread for any profession. So,people should stay alarmed. I once take help from a letting agent and came to know that letting agents are taking every precaution to prevent fraudulent...

view article
Mark N.
Mark N. 30 Aug 2017

We have seen a surge in instructions over August and that should continue into September too.

view article
Chris
Chris 30 Aug 2017

Unfortunately, all the legislation bears its force on Landlords and ignores, naively, the effect of Rogue Tenants on the ability of landlords to keep houses in repair and offer properties for rent at reasonable...

view article
Christian Donovan
Christian Donovan 18 Aug 2017

The write-down on house values, combined with the fall in the GBP saddled the fund?s property portfolio with a 1.4% loss in the second quarter. The shocking amount of $240 million.

view article
Samantha Goodman
Samantha Goodman 11 Aug 2017

Interesting point of view.

view article
Samantha Goodman
Samantha Goodman 11 Aug 2017

It depends on the people, some older adults decide to make a long-distance move in order to live closer to their children or settle in a place with a lower cost of living.

view article
brandonlee10
brandonlee10 24 Jul 2017

The financial ramifications of the triggering of Article 50, the starting gun for Britain's departure from the EU, are far from clear. Buyers will be most cautious in London, given that buying a home in...

view article
IrisJ.
IrisJ. 19 Jul 2017

Great advice, but may I also add that when buying an already built home, make sure you do all of the proper inspections. Most importantly pest inspection because people tend to get surprised when they

view article
IrisJ.
IrisJ. 17 Jul 2017

The third point is, in my opinion, the most important one. People have become too inconsiderate and careless when it comes to rented properties. If a landlord wants to protect their property, regular visits...

view article
cornishalan
cornishalan 10 Jul 2017

Added to the cost of purchasing these village properties are the above average maintenance costs. Particularly where the property is a listed building or requires specialist building skills such as thatching...

view article

Related stories

More articles from Finance

Property Finance Roadshow 2017

4th - 12th October

4 days
6 specialists
4 locations
Free to attend

Click here to register now