Monthly gross remortgage lending hit its highest level for eight years in July after being boosted by the UK’s vote for Brexit.
According to data from LMS, remortgage lending was £7.1 billion in July as homeowners rushed to lock in lower mortgage rates post-Brexit.
This monthly figure for July is up by more than a quarter (27%) from £5.6 billion in June and is the largest amount since October 2008.
The number of remortgage loans also increased by 27% from 32,400 in June to 41,157 in July – the most since January 2009. The July total was up by more than a third (36%) year-on-year.
Rising house prices, declining swap rates and speculation about an imminent base rate change at the Bank of England have all contributed to a favourable outlook for the remortgage market.
LMS data shows that homeowners are remortgaging more frequently and keen to capitalise on the competitive rates currently available.
The term of the average loan that was remortgaged fell by nine months from five years in June to four years and three months in July.
The surge in remortgaging meant the total amount of housing equity withdrawn via this route in July rose by more than a quarter (27%) from £951.8 million to £1.2 billion.
Andy Knee, chief Executive of LMS, said: “The aftermath of the UK’s vote to leave the EU has not overshadowed an environment that is ripe for remortgaging as product rates plummeted to new lows. Homeowners have been quick to capitalise on this and there’s little sign that incentives to remortgage will disappear any time soon.
“People who remortgaged in July did so more frequently than they have for more than six years – no doubt to take advantage of low rates in many cases and reduce their outgoings. Feedback suggests almost two-thirds remortgaged in July to take advantage of competitive rates, highlighting that significant savings are ripe for the taking.
“Although there is little for homeowners to fear in terms of a base rate rise over coming months, many could seek stability by remortgaging and fixing now, and we expect activity to maintain its momentum through the rest of 2016.”
To help boost growth the Bank of England has cut interest rates from 0.50% to 0.25% – the lowest on record. It is the first interest rate cut since 2009, when the financial crisis was at its peak.
With lenders slashing rates, experts believe there has never been a better time to get a mortgage.
According to the latest figures by Moneyfacts.co.uk, the average two-year tracker rate is now 1.96%, down from 2.02% at the beginning of August.
HSBC recently launched a two-year fixed rate mortgage that has an interest rate of 0.99%, the lowest since records began.
Nationwide has cut its fixed rate and tracker mortgages by up to 0.25%, while Halifax has reduced its rates on its first-time buyer mortgage range by 0.30%.
Coventry Building Society has also launched the lowest ever 10-year fix at 2.39%.
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