Remortgage lending for July was up 13 per cent on June, but at £3.5 billion it remains low by historic comparisons and down on the same time last year, according to LMS.
The property services firm, which provides conveyancing, remortgage, and survey services, says that borrowers have been holding back on remortgaging and waiting for more attractive deals to come through.
LMS has published its first Remortgage Report which shows that borrowers who are remortgaging are typically increasing the size of their loan, releasing an average of £16,000 equity to allow them to pay off other more expensive debts or to improve their standard of living.
Borrowers are typically remortgaging after four years and five months compared to an average of five years and two months last year.
Andy Knee, chief executive of LMS, said: “July’s remortgage lending is still low in the context of the history of mortgage lending. The July value followed a sharp fall in June, itself the lowest remortgage lending figures since December 2010.
“The low monthly figures reflect the fact that many borrowers, already on competitive existing rates, have had little incentive to remortgage. Indeed, most new deals which borrowers could have taken out and completed in June or July would not reduce monthly repayments sufficiently to encourage people to remortgage so borrowers have held off taking any action.
“However, the good news is that better deals have materialised. Lenders have recently launched a number of sub 3 per cent rates with terms of four or five years. This has led to a real surge in remortgage applications in late July that has continued into August. We had been expecting this to be a disappointing time with the distraction of the Olympics but the reverse has happened.
“These applications should become completions in late August and September and suggest that we will see a sharp rise in remortgage lending later in the year.”
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