Remortgage customers took out huge amounts of equity in June as interest rates remain at record lows, the latest data from outsourcing property service provider LMS shows.
The average amount of equity withdrawn from remortgaging last month was £34,505 per customer, this is a 28 per cent rise from May, an 81 per cent jump from June last year and the highest amount since records started in 2005.
Annual remortgage repayments now account for less than a fifth (17.6 per cent) of household income, slightly lower than last month when they accounted for 17.8 per cent and the lowest ever on record.
The total amount of equity withdrawn from remortgaging in June 2015 reached £852 million, which is the largest sum taken out since July 2008.
The number of remortgage loans grew to 24,693 in June 2015. This was 9 per cent higher than May and 2 per cent higher than the number of remortgages recorded in June 2014.
Interest rates have been falling for eight months and in May the average rate stood at 2.59 per cent. The recent comments of Bank of England Governor Mark Carney hinting to a possible base rate rise at the turn of the year, suggest that mortgage rates are set to rise as well. Customers are therefore advised to remortgage sooner rather than later to be able to take advantage of the best deals currently on offer.
Andy Knee, chief executive of LMS, commented:
“There is a general sentiment of positivity throughout the summer, as families are able to remortgage for record amounts of extra income, but economic improvements are struggling to filter through to many families who still feel the pinch.
“It is, perhaps, a little hawkish for the central bank to raise the historically low interest rates, following Mark Carney’s words last week that rates may rise by January. A rise in interest rates, however small, would see outgoings increase, affordability tighten and place added pressure on struggling households.
“Whether or not an interest rate rise will come to fruition this year, borrowers need to prepare for the Bank of England rate raise. Now is the opportune time to take advantage of lender appetite and a low base rate, seek out the best remortgage deals on offer, and fix low rates before any change kicks in.”
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