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.”

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Jimmy_McCoy
Jimmy_McCoy 16 Sep 2016

I think that the main reason to buy garden purchases in last minute is because people always search for the best deal. In summer months there are abundance of seasonal goods and it means more low cost

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Jimmy_McCoy
Jimmy_McCoy 16 Sep 2016

Buying a home often is more expensive than you expect. There are lots of hidden costs such as: stamp duty, surveys and valuations, mortgages etc. that can add more than 10% to the total bill

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Homebuyerconveyancing
Homebuyerconveyancing 15 Sep 2016

We are seeing a massive influx of Homebuyers using online Estate Agents. The winners are the online portals that still aim to manage the customer journey to homeownership. They provide a valuation service,...

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oliviaG
oliviaG 12 Sep 2016

Without a doubt renovating can truly be very beneficial to many homeowners but it depends to a great extent on the condition of your home and the parts of it you want to refresh. Before you start you should...

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oliviaG
oliviaG 29 Aug 2016

So true about cats!

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Jason Roberts
Jason Roberts 25 Aug 2016

Any predictions what average rent will be at the same time next year, anymore drops coming?

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dylanvan
dylanvan 19 Aug 2016

very good, thanks for sharing

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SecomTech
SecomTech 19 Aug 2016

Firstly, I either lodge with DPS or do not take a deposit...secondly, If a tenant has not received a confirmation their deposit is secured with either a scheme or in an insured account with an agent/landlord,...

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jasonevans
jasonevans 19 Aug 2016

Belvoir has over 15 years of experience in property lettings, buying and renting and is one of the best agencies I know about. I have heard that they revived an award for the hard work. Really amazing...

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jasonevans
jasonevans 19 Aug 2016

Usually these areas are least affected when it comes to unexpected economical collapse.

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TheWaspNestRemover
TheWaspNestRemover 11 Aug 2016

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madisonwelch80
madisonwelch80 02 Aug 2016

16% is quite a raise. Let's hope this tendency won't continue for long.

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