It was a bumper year for remortgaging last year, driven by record low interest rates, new figures show.
According to conveyancing service LMS, the total value of remortgage lending in 2016 rose 21% to £65.7 billion – the highest figure since 2009.
The total number of remortgages in 2016 hit 384,950, an increase of 15% from 333,400 in 2015. Over the course of a year the difference is equal to almost 4,300 additional remortgages each month.
Remortgaging involves switching your current mortgage deal either with your existing lender or to a new one.
By choosing to remortgage you can reduce monthly repayments, move from a variable rate deal to a fixed rate or even release equity in your property.
In August, the Bank of England cut the base rate for the first time in seven years to 0.25%, prompting mortgage lenders to slash rates.
With the number of competitive deals on the market growing, many borrowers are choosing to remortgage to take advantage of the low rates currently on offer.
The average frequency with which homeowners remortgaged in 2016 was four years and nine months – two months less frequently than in 2016.
This is a sign that homeowners capitalised on the record low rates that were available throughout the year to reduce their monthly outgoings. LMS data found that 89% of remortgagors were able to lower their monthly mortgage rate and one in five lowered their monthly repayments by up to £500.
When surveyed, 66% of people who remortgaged in November said they plan to remortgage again within the next four years in a bid to keep capitalising on the low rates available.
Andy Knee, chief executive of LMS, said: “Anticipation of interest rate rises in recent months have also encouraged more people to remortgage with many opting to fix for longer. We’re already witnessing surging where the last lender to raise rates experiences huge application volumes as buyers desperately try to take advantage of the lowest rates. Ten year fixed term mortgages are also becoming increasingly popular as people seek longer-term security while the terms of Brexit continue to be thrashed out.
“As we look ahead to 2017, we expect lenders to start raising the rates they have on offer – a view reflected among borrowers – 32% now anticipate a rate rise in the next year – who can remortgage to fix now to secure favourable rates.
“The full impact of the EU referendum is still waiting to be felt in most areas of the economy, including the mortgage market. We expect confidence to fluctuate in March if Article 50 is declared, as expected. Rising inflation will apply added pressure to household budgets, so any way to reduce outgoings, such as remortgaging, will be welcome relief to many families who start to feel the squeeze.”
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