Homeowners across England and Wales are borrowing more than ever before when they remortgage, according to My Home Move.
Its research found that homeowners remortgaged for an average of £15,000 more in 2016 than they did two years ago, borrowing around £181,000 compared to £166,000 in 2014.
Some 57% of remortgage cases in 2016 were capital raising, suggesting homeowners wanted to release equity cheaply for home improvements, to consolidate debt or to act as the Bank of Mum and Dad.
My Home Move found that those in the East Midlands borrowed almost double the amount in 2016.
Those in the East of England, Home Counties, North West, South East and Wales also increased their debt compared to two years ago.
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.
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.
It was a bumper year for remortgaging last year, driven by record low interest rates.
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.
This led to a rush of activity in the remortgage market as borrowers looked to lock into long-term deals before rates go up again.
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.
Doug Crawford, CEO of My Home Move, said: “This overall increase in borrowing suggests that homeowners are taking advantage of the cheap remortgage deals which have been around for the past few years, and thanks to the Bank of England base rate cut in August, will remain so for months to come.
“With such low interest rates, using a mortgage to borrow money can be a smart move. Our research has revealed that 57% of cases from 2016 were remortgaging to raise capital, compared to pound-for-pound borrowing, suggesting people were looking to consolidate debt, release equity to fund home improvements or to pay their children’s university tuition fees or first-time buyer deposit, as the Bank of Mum and Dad was raided again.”
“Our remortgage activity has been steadily increasing over the past few years, and with the threat of a rate increase due to increasing inflation levels, brokers and consumers are alert to ‘this won’t last forever’ sentiment. We have already seen SWAP rates, that govern the price of fixed rate mortgages, increasing over recent weeks and this will drive further activity.
