Remortgaging activity remained strong in April, despite the mortgage market slowing as a result of Brexit and election uncertainty.
According to conveyancing service provider LMS, 38,475 remortgage transactions were made in April, an increase of 8% rise from the previous month. On a yearly basis the number of deals increased by 10% from 34,700 in April 2016.
The total value of remortgage lending increased 2% month-on-month to £6.1 billion.
Separate figures from the Council of Mortgage Lenders show that monthly mortgage lending fell 11% to £18.4 billion in April, slightly up on the £17.7 billion a year ago.
Experts believe this dip is most likely down to uncertainty triggered by the snap general election and Brexit, with buyers putting their plans on hold until they decipher how the market will be affected.
LMS said that remortgaging accounted for a third (33%) of total lending for the month, up from 28% in March.
Households feeling the squeeze on their finances from rising inflation and stagnant wage growth are turning to remortgaging as a way to ease pressure on the family budget.
Under a fifth (15%) remortgaged to unlock equity to pay off debts, a big jump from one in 10 (11%) who did the same in March.
However, the desire to spend money on home improvements remains the most popular remortgage driver, with a quarter (24%) choosing to do so in April.
Andy Knee, chief executive of LMS, said: “The remortgage market had a good month in testing conditions. With total mortgage lending falling, the market share of remortgaging increased to 33% from 28% in March.
“In the next few months, the general election and Brexit negotiations will cast a shadow of doubt over the future of the purchase market. Homeowners should seriously consider remortgaging now while rates remain low and in case market conditions worsen significantly.”
With the average mortgage rate remaining at 2.13%, remortgagors are looking to fix for longer. Of those who remortgaged in April, over a third (34%) fixed for five years, in contrast to one in 12 (8%) who previously had a fixed five-year deal.
This continues the trend of homeowners fixing onto longer term deals in search of security.
“The fall in real wages in the first three months of the year has placed a real strain on family finances. Despite this, it is encouraging to see increased numbers of homeowners planning their finances in advance by remortgaging in order to pay off debts, and consulting with brokers in the process to ensure they get the best possible deal,” said Knee.
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