Remortgaging at the end of 2014 was easiest to afford for UK homeowners since the start of 2011, the latest LMS figures show.
The annual repayment as proportion of income in December last year was 18.8 per cent, down from 19.2 per cent in November and from 20.4 per cent a year earlier, the outsourcing property services specialist said.
The average household income has also improved in the past year, rising to £45,404 in December 2014 from £43,000 at the end of 2013, according to data from the Council of Mortgage Lenders (CML). This increase is an indication that wages are finally starting to grow, LMS says.
Remortgaging has also taken up a bigger market share in January. With 28 per cent, the share was the largest recorded since September 2013.
The total equity withdrawn by remortgaging grew 40 per cent year-on-year in January 2015 to £509 million, but was 19 per cent below the December 2014 figure of £629 million.
LMS has estimated that number of remortgage loans taken out in January has increased 20 per cent to 26,756 from December. Compared to a year ago, however, the number of loans was 7 per cent down.
Gross remortgage lending also increased 20 per cent on December, to £4.07 billion, but was lower by 5 per cent compared to January 2014.
The average loan was £152,057 (up by 2 per cent on December’14 and by 0.2 per cent on January’14). London had the largest average remortgage value of £256,140 and the lowest, of £100,557, was recorded in the North East.
“We’ve finally started to see wage growth, bringing some welcome respite to families who really felt the pinch over Christmas; the average amount of equity withdrawn through remortgaging per customer fell by a third compared to December, suggesting less pressure on household finances.
“Furthermore, the competitive rates available for remortgaging, coupled with rising wages, means that repayments now account for just 18.8% of income – the lowest amount since January 2011. This combined with the current deflation of prices should further boost household spending power and contribute to confidence in the economy.
“The run-up to the election has the potential to destabilise the confidence gained in the housing market but low interest rates should maintain lender appetite, and people should consider remortgaging to get the best deal available to them,” LMS chief executive Andy Knee commented.
