The last time the total amount of equity withdrawn through remortgaging in the month of December topped this was in 2006, prior to the recession, when equity withdrawn totalled £1.4bn.
December’s figure of £837m is almost a third (32%) more than December 2014’s £635mn, but has decreased by 24% from the £1.1bn recorded in November.
LMS analysis also reveals that the average amount of equity withdrawn per customer from remortgaging fell from a record high of £36,894 in November 2015 to £30,361 in December 2015. However, this still marks the largest amount of average equity withdrawn per person in the month of December since LMS started its remortgage report.
The smallest amount in any December was in 2008, when the average amount withdrawn was just £8,834 per person.
The latest figures from LMS also show that monthly gross remortgage lending rose by 27% year-on-year to £4.3bn in December 2015, up from the £3.4bn of remortgage loans recorded in December 2014. This is, however, a fall of 12% from November.
The number of remortgage loans also decreased, from 29,800 in November to 27,567 in December – a drop of 7%. However, the total number of remortgage loans is still 23% more than that of December 2014.
Andy Knee, Chief Executive of LMS said: “Remortgaging activity slowed at the end of the year after a noticeable autumn rush. However, year- on-year figures show the market remains buoyant, with a marked difference from the year before. Rising housing equity and low rates means borrowers are able to withdraw large sums of equity to support Christmas expenses and buy presents for friends and family without dramatically increasing the cost of their loans.
It’s been a rocky start to the year as volatile financial markets, limited economic growth in the UK and a weaker pound take their toll. However, global instability is unlikely to have a significant impact on house prices, and housing equity is set to hit record levels. Mark Carney has also ruled out the likelihood of an interest rate rise until 2017, welcome news to many borrowers.
It’s therefore understandable why people may not think it necessary to remortgage right now. However, as the New Year begins we urge homeowners to take stock of their finances to avoid being caught out when rates do start to rise. Whether this means withdrawing equity to pay off other debts, or fixing to a lower rate to reduce monthly outgoings, an intermediary can be invaluable in advising customers of their best course of action.”
